From Angry Birds to educational programs that test technical know how – gaming has infiltrated not only our ipads, but also our offices. The banking industry is no exception. Over recent years a new era has dawned that presents both new and complex challenges. To tackle these, it is imperative that key personnel acquire sharper management skills so that they are ready to act strategically in any given situation.
For over three decades, Dr. Neil Seitz has been pioneering simulation games for the banking industry. His commercial career began in the 1980’s when he was asked to develop a bespoke training tool for a major bank, which helped executives manage interest rate risk in response to fluctuating market conditions. His first simulation morphed into a suite of products focused on numerous facets of consumer banking, including foreign exchange rate risk, loan portfolio management, credit scoring, fraud, and collections management.
“It isn’t that I try to use a simulation for everything I want to teach—it’s that there are many things more effectively taught through simulation than from other techniques.”
~ Dr. Neil Seitz
Dr Seitz quickly realized that although simulation alone couldn’t replace all other forms of training, it had the potential to be one of the most important tools in the educational toolbox. As he explains, “It isn’t that I try to use a simulation for everything I want to teach—it’s that there are many things more effectively taught through simulation than from other techniques.”
Angry Birds for Bankers?
Although Seitz’s simulations cannot yet be placed into the addictive arena of Angry Birds, competitiveness is a key component. Players focus their attention on achieving a universal goal: maximizing profitability. Players operate in their own identical marketplace in which they have to make decisions with the standard environmental uncertainties found in the real world. Despite it being a simulated game, the charts and reports that the player is exposed to essentially the same as those that would hit the desks of bank managers and executives.
How do you Calibrate Theory with Reality?
Having earned his Ph.D. in finance, Dr Seitz is careful to ground each game in formal theory, “If the theories I teach my students can’t be put into these games, then the theory isn’t going to have any relevance”. For example, “Demand theory tells me that raising the interest rate 1 percent would fall, but theory does not tell me how much it will fall. ” Seitz turns to senior industry executives for their valuable insight, so that the theory can be calibrated with reality.
What is the secret to successful simulation?
Simplicity. For Seitz, a simulation has to be complex enough in terms of the variables to provide a realistic context, yet simple enough so that the players can clearly identify the relationship between their actions and an outcome. Only by keeping this careful balance between capturing the essence of the situation without becoming lost in unnecessary detail, can optimal learning be accomplished.
Dr Seitz compares the games he creates with flight simulators, “With a stick that moves in four directions, the player can fly the airplane to anywhere on earth and respond to an infinite variety of environment changes. If a flight simulator has 150 different buttons to push and 40 different levers to pull, the student will not have the slightest idea how her actions affected the outcome. …The number one reason for failure in a game is that you did an excellent job of catching every variable that might have the minutest impact, but by doing so lost focus on those that are key. …The secret of successful simulation design is elegant simplicity.”
What does the future hold?
Having observed the fallout from the global economic crisis, Dr Seitz has turned his ambitions to developing a simulation that better equips executives to deal with worst-case scenarios. Observing students play his games, Dr. Seitz noticed a broader story being played out in the confines of the classroom. He observed that, “The team that’s in first place continues to make very rational decisions. The team that’s fallen into last place begins to make irrational decisions. They lose the ability to focus and figure out what to do.”
This is another area where Dr Seitz predicts that simulations could really come into their own; by placing participants into “simulated meltdowns” they can test their mettle and learn from their own experiences.
With careful development, gaming could really begin to pave the way to a brighter future. If simulations continue to successfully meet demands, they could well reach their potential of becoming an irreplaceable training component; playing a key role in safeguarding the fortunes of the banking industry, today.
In 2012, Dr. Seitz teamed up with BankersLab to build out a robust Web Application platform which has evolved into a sophisticated suite of simulations. The rest is history!