5 min read

Fortnite and fintech

Sam Maule

The future of financial services changed on the 2nd of February and not for any reason you’d expect. That was the date the online game Fortnite held an in-game concert that was viewed by over 10 million people live.

You might be confused as to what this has to do with finance. That’s okay, it’s the same reason that as an industry we’ve been behind the curve since the Internet was created. Simply put, it’s the future of digital experiences.

Go to your customers

Marshmello, a DJ who could be anyone and no-one, partnered with the most popular game on the planet and threw a digital concert. It might sound like nothing to those of you who aren’t gamers, or young people, or digital life, but the young people who are living this experience are your future customers. Their expectations matter.

It might sound ludicrous and it’s been done before. Deadmau5 had a concert in Minecraft, Duran Duran had a Second Life branded ‘universe’ and ABN Amro even built a virtual bank branch in Second Life but this was different.

Previous attempts in the space lacked the graphics, connectivity or the speed to create an immersive touchpoint for users to feel like they were really interacting with the experience.

And that’s where banking needs to be. It needs to provide an environment that customers can interact with. Banks need to focus on becoming a part of the digital landscape rather than just dumping products onto it.

Many financial innovations being implemented today were thought of years ago but needed technology to catch up. The technology is available today but somehow the strategic thinking in incumbent banks isn’t able, or perhaps is even unwilling in some cases, to take advantage of them.

It’s not about building a wallet for a wallet’s sake. That’s what we’ve been told is the ‘next big thing’ in North American banking for years. Everyone was going to get a digital wallet, but no-one had any plans for what was going to be done with them. No-one had a service or product that benefited from them.

There is no structure or plan in place around digital transformation in the US today. Digital wallets were just a thing banks created for people to use in the US but they were connected to nothing. You might be asking yourself, "What does this have to do with Fortnite?". Well, nothing really. Fortnite created a service people use.

Shifting business models

Business models across industries continuing to shift at an ever-increasing rapid pace. No more so than in the gaming industry and Fortnite has been at the forefront of this (see what I did there?). Fortnite has proven the freemium gaming model is actually both a viable and successful business model for the gaming space.

Quartz wrote an excellent overview of the financial side of Fortnite. Players are able to download the game for free, play for free, and socialize with their friends for free on the game. There simply is no fee to play and be able to dominate within the game.

There is, however, the ability to purchase “skins” (character costumes), gaming objects, and character dances that enhance the user experience. The article notes these game enhancements have zero impact on a player’s ability to win at the game. These payment options are simply there to enhance the user experience, to embed the love of the game deeper within each player.

And this payment option works. According to the Quartz article, the average Fortnite player spends $58.25 on these experience enhancements. This average is across all players including folks who didn’t spend a dime. When you only consider folks who paid for the enhancements the user average increases to $84.67. This resulted in an annualized revenue of $2.4 billion in 2018 for this free game. Mind boggling.

Several critics have locked into the average spend numbers. But consider this, the average cost to purchase a new game for an Xbox or PlayStation 4 is $59.99 retail. Additional experience add ons for these games range north of $25.00. And these are games that don’t automatically include new gaming options, maps, or user experiences.

So at its basic level, the free version of Fortnite is actually cheaper than its competition. And even with the average spend on enhancements the game is still cheaper than its competition. And users spend a great more time on the game as the experience constantly evolves.

Iterate. Iterate. Iterate.

Fortnite is a holistic digital experience for customers; digital wallets in the USA just exist independently of everything else. Fortnite is to gaming what challenger banks are to finance. It’s already evident in the UK with products like Monzo and Starling Bank. There isn’t a real comparison in the USA, Chime has seen significant growth but it is still reliant on an actual underlying bank’s charter. Sustainable revenue growth under this model is, well, really hard.

Monzo and Starling set about creating one key touch point each for customers, just one service that solved one problem. But they had a clear roadmap for where that one touch point would take them. That served as the linchpin for these challengers to build out a service that saw each of them claim exponential growth.

Starling iterate like crazy, that’s why they’ve got such a good service. None of the challengers approach the market as though there is a magic bullet that will create a holistic experience for customers. The issues facing customers are so complicated that no single solution will solve all your problems. Fortnite got to be the biggest game in the world because of its speed of iteration. Almost no-one in the financial sector is moving at that speed, no incumbent banks are, that’s for sure.

The future isn’t just one thing, it’s a blend of everything. So you can deliver projects and work on one bit of technology that seems interesting, but unless you have a plan or at least an idea of how it’s going to blend together then you’re starting from a worse position than zero.

Have a plan. Iterate like crazy. Then you’ll be able to provide a service that exists where your customers won’t just want to be, it’ll be where they live.

Learn how to create a service that your customers will live by getting in touch here.

This article was updated with additional content on 18/03/2019.

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 Sam Maule
About the author

Sam Maule

Sam (or Uncle Sam as he is known internally - and appropriately at 11:FS) is responsible for the 11:FS overall strategy and rollout in the US, Canada and Mexico.

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