Will augmented reality transform banking?
There has been a lot of rumour and speculation recently, focused around the news that Apple is working on augmented reality (AR) as its next major product. Last year, we saw how fast the take up of AR could be with the introduction of Pokémon Go that became a massive international cultural phenomenon almost overnight.
Rumours suggest that Apple will tap into our latent interest by embedding new AR technology in the next iPhone and eventually by developing smart vision-wear. Once people get used to experiencing a digital layer over their everyday reality, new opportunities exist for financial services firms to engage with customers.
While today this might all seem quite far off, the future is coming up quickly. Banks need to prepare sooner rather than later if they are going to take advantage of AR and not be left behind.
What are banks currently doing with AR
If banks harness AR to make day-to-day banking more efficient, there are almost endless applications. Some banks have already dipped their toes in the waters of AR. For example, the Commonwealth Bank of Australia (CBA) launched an AR home finder app in 2011 with Halifax following in 2012. In emerging markets, the Federal Bank of India offers an AR calendar which provides relevant messages when viewed through a smartphone, and the National Bank of Oman is using AR to help customers locate branches and ATMs, while also displaying the latest offers and deals to customers as they walk into a mall or retail outlet.
At this time, these are only simple use cases; for AR to take root, a couple of important things need to happen. First, we need to see wider adoption of AR technology. Banking is unlikely to be the killer app that drives adoption. But once it is here, banks need to integrate AR into their existing processes. However, AR should not be a solution looking for a problem. Banks need to stay customer centric by putting themselves in their customers’ shoes, identifying ways to surprise and delight them and persuade them to engage more deeply.
So what’s the next step for AR in banking?
We are already starting to see banks taking note of how AR could be used for their non-customer facing processes. For example, Citi wants to create a virtual trading desk. It is looking at adding a digital interface on top of a trader’s real-world environment, layering in tools to visualise complex data sets. This would help traders to see, understand, and manipulate large volumes of complex data in real time.
For the retail banking user, AR will need to strike a different tone. One scenario would be buying a product on the high street. Customers looks at something they want to buy. Their finance app can recognise the specs and price, and overlay this data on their real world view. The app could then include options for a loan, and even illustrating various repayment amount options. Customers can then complete the payment for the product there and then through their device – perhaps authenticated by integrated biometrics.
Visa Europe is already experimenting with this, and has teamed up with the AR app Blippar, to transform retail experience. Their pilot, unveiled at a recent fashion show, enabled designer garments to be instantly purchased straight off the backs of models.
What will happen if banks don’t act?
Put simply, if banks don’t act fast to take advantage of AR’s potential, a start-up will. Goldman Sachs believes that virtual reality will be an $80 billion business by 2025 – a juicy target for challengers. A failure to step up and make the most of AR at a time when Apple, Google, and the big tech players are incorporating it into their devices and services will be a missed opportunity. The new Payments Services Directive (PSD2) in Europe will make it even easier for start-ups, helping to level the playing field by giving them access to a customer’s account and payment information.
For example, a fintech challenger could emerge with a compelling aggregated user interface that attracts customers and disintermediates banks. The new provider would own the customer relationship. The bank then risks becoming a utility – selling their products through third party agencies or marketplaces. This would cut the bank out of the vital customer data which helps them to develop targeted propositions and marketing.
So what should banks currently be focusing on?
At this time, the smart thing for banks to do is focus on the journeys and interactions that matter to customers. This will enable banks to see where AR could be deployed to provide customers with the best experience.
Then banks must see how they integrate AR enabled processes with back office customer data and middle office decision management processes, to provide useful information to front end applications and deliver the seamless experience customers demand.
Banks also must keep their eyes on the horizon. In the future, AR could even facilitate realistic face-to-face interactions with specialists from the comfort of a customer’s own home – potentially rendering branches redundant. AR is just emerging. Banks must seize the opportunity.
By Alex Bray, assistant vice-president, consumer banking, Genpact