Virtual Reality in the Financial Services Industry
Financial services are set to be disrupted. This sector is lagging behind other industries as differentiation in this area is difficult to achieve due to the inherently complex and intangible nature of financial services products.
According to the Millennial Disruption Index, 53% of U.S. customers do not think their banks offer anything different from other banks, leading to a likelihood of 1 in every 3 individuals switching banks in the next 90 days. As a result, it comes as no surprise that the survey identified banking as the industry with the highest risk of disruption due to such low levels of customer loyalty.
The detachment or absence of an emotional connection between a customer and the financial services industry stems from a lack of customer-centricity. Many companies often overlook the importance of placing themselves in their customers’ shoes in order to truly understand their problems, needs, and circumstances. Such circumstances could be as simple as taking the length of a journey required by customers to travel to their financial services branches into consideration – this could prove a significant problem especially in the more rural parts of large countries like India and China, where each journey can take several hours.
Exploring solutions to alleviate this particular problem, financial services companies such as Wells Fargo have started experimenting with Virtual Reality technology and leveraged its benefits: their experiment entailed designing a game in Virtual Reality as an experiential marketing campaign. Despite the fact that it is still in its stages of infancy, Virtual Reality holds a promising future as supported by a Business Insider Intelligence report forecasting a rise in the shipments of Virtual Reality headsets, from a $37 million market this year to a $2.8 billion hardware market by 2020.
Virtual Reality technology combines un-natural human interfaces with the ability to provide immersive experiences for the customer. Here, the phrase “un-natural human interfaces” conveys the idea that humans are increasingly comfortable interacting with modern technology. The implications of developing Virtual Reality experiences around service and sales for financial services brands are twofold:
The first pertains to service, which can take the form of a digital on-demand advisor that mimics face-to-face interaction using an avatar that can be automated using Artificial Intelligence. Such use of virtual technology has the potential to lead to an enormous increase inconvenience for the customer (especially if this is easily accessible from locations such as their residences or workplaces). Virtual Reality will create an on-demand virtual branch staffed by the best experts thus getting rid of irritating waiting times and removing the need to drive to distant branches which in turn will lead to increased customer satisfaction and loyalty.
The second concerns sales. Virtual Reality in financial services completely surrounds a user, creating immersive experiences that will allow easy communication through the platform.
What we have termed ‘easy communication’ can take the form of experiential journeys where customers themselves are the protagonists in the story, helping them to understand the aforementioned complex and intangible financial products. Consequently, this enables financial services brands to engage with their customers on both an emotional and rational level by breaking down complicated data according to specifications that are uniquely personalized and tailored for them.
The experiments we have conducted so far have revealed a largely positive reception. Many customers thought introducing virtual technology was innovative and novel, providing an exciting and convenient new medium for financial services. That said, such technology in this sector has a long way to go – it has yet to address concerns such as those relating to physical hygiene, and questions as to whether there is a real need to develop such complicated and robust technology when other options such as FaceTime already exist and are readily available. These were the main criticisms highlighted by our customers.
Despite the uncertainty surrounding the applications and usage of Virtual Reality technology, it will continue to grow and flourish in the next few years and has the potential to revolutionize the way businesses interact with customers. Virtual Reality itself poses as the future of entertainment and gaming industries worldwide – but its growth may create a domino effect that disrupts and places its customers at the heart of the financial sector.