virtual reality banking payments

Will virtual reality change how we bank and pay for things?

Virtual reality (VR) and augmented reality (AR) are beginning to change the retail world, with AR changing rooms in shops, and apps that let us place furniture in our homes before we buy, or take cars for a test drive from the comfort of our beds. Is this technology going to shake up banking and payments? And, crucially, will it positively impact the customer experience?

Virtual retail means virtual payments?

We’ll start with payments because, as many commentators have noted, the retail world will probably be the first (after entertainment) to fully embrace the potential of virtual reality.

Oliver Smith from The Memo tried out Worldpay’s latest solution, a virtual card machine that we can use in the virtual shopping worlds we will inevitably soon inhabit. Tapping a virtual card on a virtual card reader is one element, with another process for transactions requiring a PIN: numbers scattered around the ‘room’ that you can tap. The journalist comments that the vibration on payment is ‘reassuring’ but laments that customers still have to remember their PIN in this exciting new world: ‘What’s most disappointing about the future of virtual retail and virtual payments, is that the future looks so much like the past.’


He did tell us: ‘If we really want virtual reality to be that all-encompassing marketplace of the future which science fiction has promised, easy payments aren’t important, they are essential.’

However, I asked Dennis McNulty, Head of Payments at HelloFresh, if VR would have a major impact on payments and he told me: ‘My answer is yes and no. Yes because the ways in which payments are initiated are changing, which includes new mediums like selfie payments and so forth. So will a payment be initiated by capturing a Pokemon as means of authentication? Perhaps. However, I also say no, because although the initiation of a payment can change, the underlying payment is not changing. Money is taken from your account, it is sent to the merchant (after some layers)… and I don’t see this changing. Even with bankless-banks and borderless banks, the fact is that customers are still making payments from their banks and the majority are still happening through Credit Cards and Bank Transfers. I know that people like to create hype about the future, but a more realistic point of view from me is that banks will still be around and we can mask the look and feel of a payment, but its underlying mechanism will remain the same.’

A better banking experience?

And what about banking? As physical branches disappear – and customers enjoy using a range of methods to contact and engage with their bank – could a virtual approach offer an efficient and effective way to delight customers, and offer excellent help and support? Whether you are a bank or a merchant, virtual reality will be (or ought to be) cheaper than running physical branches or stores. This could mean smaller locations where people use VR tools provided by the bank or, ideally, people visiting ‘branches’ virtually from the comfort of their home (or office, or wherever).

BNP Paribas released a VR-based retail banking app this month, the first example of VR being used by a big bank beyond marketing efforts.

They said last year on their blog: ‘With online banking, you can already contact bankers by email, live chat, call back and more. Tomorrow, you can meet with their avatar inside a virtual branch, so your banker can present offers and advice, show simulations through modified, real-time graphics based on different parameters, etc. Easier and more engaging than a phone conversation or even a video call, the “virtual meeting” is just as effective as an in-person meeting with no need to travel! Augmented reality will also come to mobile apps capable of tracking your location and guiding you to a branch by “materializing” your path.’

As Finextra reported, Wells Fargo has a massive ‘Digital Labs’ facility in San Francisco where VR is being used all over the place. Whether that means it will reach customers soon is another question, but it’s known that employees are using VR to showcase new technologies to customers, executives and other members of staff.

And, according to Financial Brand, ‘Citibank and Fidelity Investments have been testing more advanced VR technology to view and analyze data sets. With a headset on, a wealth customer can view multiple data sets all at once, zooming out to see high-level patterns and zooming in for a closer look.’

Total immersion for higher engagement

Could VR improve customer experience? Perhaps. By providing a completely immersive experience, for example, banks could realise their ambitions of a totally self-service and automated digital banking platform – and, for customers, this means a digital experience that properly emulates the sadly-gone-forever in-branch experience. It combines a tactile branch experience with the self-service goodness of a desktop or mobile banking platform. As well as letting customers move around a virtual branch, brands could use avatars to almost entirely replicate the old banking experience – at far less cost.

The ultimate in personalisation?

Moreover, VR offers up the possibility of pure segmentation. Whole virtual environments can be conjured up that are completely bespoke to the individual using the technology. And it doesn’t just have to be simulated bank branches – utilising the big data that we know big banks have access to, the environment can reflect a segment or user’s hobbies and interests, life stage and more.

You could argue that approaches like chatbots, and banking via voice, already support this enhanced 1:1 experience – that placing a customer in a virtual ‘branch’ is a step too far, and doesn’t drive the value that, for example, an artificially intelligent virtual assistant on a mobile phone could deliver.

However, reports – such as this one from Bank of America – suggest that people expect augmented, virtual and mixed reality (MR) to become the norm, or ‘the “form factor” for nextgen computing as a universal, smart, and intuitive interface for the internet of things (IoT) ecosystem. It could be the technology that disrupts the rules – bridging the digital and physical worlds.’ Their analysis suggests that peak adoption will occur around 2019.

In other words, when the software and hardware improves – and the tech is backed up by artificial intelligence and big data, of course – everyone will be loving it.

What do consumers expect?

As virtual reality takes off in other sectors, consumers will not only become more familiar and comfortable with the technology, they will come to expect it – if it works well – from other apps they interact with. As application journeys more closely resemble slick ecommerce checkouts, help and support uses the chat-based approach you’d see in social media, and PFM offers up recommendations and insights a la fitness trackers, so too will VR banking stem from good examples in (most likely) retail and travel.

Crealogix, who presented their VR technology at Finovate Europe this year, offer a VR banking app. They say: ‘The online banking world is not an enjoyable place. Complicated interfaces and static numbers do not lay the foundation for a good customer experience. Financial decision-making is driven by logic, but also by emotion and creative thinking. Banks can engage better with their customers. Virtual reality (VR) can help doing that. VR can immerse customers in their financial world. Using vivid imagery, VR can trigger both the left and right side of the brain. Virtual reality can turn uninspiring numbers into a meaningful experience.’


Is it a gimmick?

Rich Wagner, CEO at Advanced Payment Solutions, told me: ‘VR will not replace banks or the way we bank. VR is more than a gimmick as it’s big business, and some digital banks might find commercial value to support the sector, but VR will not change the way we bank and pay for things for at least another generation (20+ years).’

However, Marc Staehli, CMO at Crealogix, commented: ‘We see a very high demand for a more intuitive customer experience in digital banking. The next generation of banking customers in particular expect banks to embrace technologies like VR. Unlike the first rather simple solutions, where the physical branch was displayed in VR, new ways of displaying balances, transactions and what-if scenarios attract those customers. These solutions are no longer just demo gimmicks, they are being used on a daily basis.’

Chris Ward, Research Manager at Mapa, comments, ‘Talk of personalised immersive experiences is really just talk until virtual reality is powered by artificial intelligence. Like chatbots, customer adoption is a long way off while the teething problems are addressed.’

‘Moreover: do customers trust banks to deploy the latest technologies safely and securely? They trust the bank to do what a bank does, but stepping into the world of VR might be taking it a step too far in the direction of becoming a tech retailer. Going into an Apple store where all the assistants are holograms is one thing, as it would be expected and something of a novelty. Visiting a bank branch and finding the same scenario might actually be quite jarring, especially considering the fact that customers are not even used to teller-less branches.’

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