Virtual Reality Banking: A Force To Reckon With

Virtual Reality (VR) can help banks respond to rising customer expectations of digitised, efficient, consistent and customised banking experience. VR can also open new avenues for revenue growth (through differentiated products and services offerings and entering new markets) and cost savings (through more efficient processes and less physical infrastructural needs). So, the million-dollar question is how real is VR banking going to be?

Virtual Reality or Augmented Reality (AR) is a computer-simulated environment where a user can get a feel of real world in a virtual situation. The user while physically not present in that virtual environment can still get the details, participate and execute tasks exactly like in the real world. So in the not very distant future, a customer can be made to live in virtual environment of a branch set-up through a VR device and have his personal banking transactions done sitting in the comfort of his home or office.

While banking has remained the same for the most of the last century, the technology has forced the change in containers through which banking solutions get delivered. VR Banking is a new and emerging field of banking where on one hand leading technology players such as Google, Apple and Amazon are investing heavily while on other major leading banks are also investing in exploring these new technologies to enhance the customer experience.

“It’s a matter of time before VR Banking becomes a reality and personal banking becomes truly personal, available in the comfort and safety of home with highly engaged customer experience. Imagine a situation like I have explained above which is going to be a reality sooner than what we can imagine. To make VR Banking a reality, each of these technologies will be needed to work in tandem with each other,” Says Sushmitshri Babu, Co-founder, EPIKINDIFI Software & Solutions, a industry leading solution provider, from onboarding, to loan origination, to credit analysis, to document and portfolio management.

Banking operations can be classified into five broad stages – Stage 1 is Onboarding requests from Retail and Corporate clients, Stage 2 is verifying the Know Your Clients (KYC) norms, Stage 3 is Risk Assessment and profiling of customers and Stage 4 is signing the Agreement and setting up of the product/service for the clients; and the last stage is advisory recommendations, if applicable,. Since Digitalization is paving way for a cashless economy, Artificial Intelligence in Fintech is being used in all the 5 stages, though the level of penetration is different in each stage.

Internet of Things (IoT) and Chat Bots operated through Robotic Process Automation (RPA) has facilitated the onboarding process of retail clients resulting in minimizing the front office and back office operations in banks. The stage 2 operations in traditional banking are being replaced by biometrics and RPA, Risk Assessment and customer profiling is being done using Machine Learning and Deep learning platforms; Block chains are being using for signing smart contracts in stage 4 and ML and NLP is being used for advisory services.

“The level of penetration is however, higher in stage 1, 2 and 3 of the various stages, where AI in Fintech is being replacing data-driven mundane chores which have higher probability of error because of repetition. Since these tasks are rule driven there is higher acceptance for such tasks. However, the penetration of AI in Artificially Intelligent Advisory system to track the bank balances and advise on investment options is relevantly very shallow,” says Dr Jaskiran Arora, Assistant Dean for Academic Operations for School of Management at BML Munjal University.

Personal banking has evolved to Online Banking to Mobile banking and now accelerating to various form factors including Virtual Reality and Virtual Assistants. However, the essence of these advents remain the same—“Make customer experience seamless & personalized”. In simpler words there are two aspect of making such an experience viable. Seamless banking experience Form Factor (VR, Virtual Assistants, Apps) Underlying Emotional Intelligence to humanize the experience (Biometrics, Facial Coding , Emotion recognition, and eye tracking).

“A super-efficient and accurate system would comprise both the key aspects to win it for a superlative end consumer bank experience,” says Mr Ranjan Kumar, Founder & CEO, Entropik Tech, India’s only EmotionAI startup.

“To remember complex and multiple passwords when logging into websites can be annoying, insecure and inconvenient. Customers are choosing to use biometrics instead of traditional authentication methods, as unique biometrics such as fingerprints, voice or face recognition make the entire identification process easier and more secure – offering greater defense against identity theft and financial fraud,” says Shantaram Jonnalagadda, Country Head for India at Yoti, a global digital identity platform and free consumer app.

Biometrics can be divided into two parts – physiological and behavioural. Physiological biometrics are fingerprint, facial recognition, hand geometry, iris recognition and voice are all touchstone characteristics of each human. Out of all these, iris recognition is likely the most suitable to AR/VR-related banking activities because it provides an optimum level of security for customers globally. Though it’s still 5 to 10 years away, online payments could be made alongside eye (iris) recognition. Similarly, a PC, smartphone or tablet could be authorized to complete a transaction by providing eye (iris) authorization using AR/VR headsets.

“The biometrics data will become the sole point of authentication for banks to identify a user or user transaction. There is already some early adoption of these methods across the globe and developers are working tirelessly on algorithms to make it perfect for future use case scenario where these methods can be deployed at a large scale,” says Sachin Dev Duggal, Founder & CEO, Engineer.ai, an AI company that focuses on effortless way to “build, run & scale” any bespoke software.

Banks are using biometrics to perform next-generation identification controls that combat fraud, make transactions more secure, and enhance the customer experience. Here are few examples of how banks are using biometrics now.

–              Fingerprint to authenticate payments, instead of entering PIN

–              Eye print authentication to do any transactions or service requests, instead of using password or token for consumer and commercial clients.

–              Voice authentication to verify the identities of customers contacting their call centres.

–              Finger Vein Reader Technology to authenticate transactions. This technology’s value lies in the unique vein patterns present on every finger, which are established in the womb and remain largely unchanged throughout life.

“Behavioural biometrics is an innovative approach to user authentication that is based on device, location and user behaviour by creation of a unique profile for every customer. This includes automatic recognition of patterns such as how keystrokes are made on a phone or tablet and how a mouse is used. The transactions originated from unusual location or unknown IP address can seek for additional authentication,” says S Sundararajan, Executive Director at i-exceed, a digital transformation partner for leading financial institutions worldwide.

Till date, biometric technology provides the strongest method of authentication that protects banking information from being compromised by unauthorized personnel. Biometric authentication is already a mandate in KYC registration for banks and Aadhaar verification. Enabling mobile application sign-in with a simple swipe, fingerprint scanning wears the crown as the most widely leveraged biometric in the industry.

“The technology first made waves in mobile banking after Apple introduced Touch ID in 2013, and institutions have since found that customers are willing to make the switch. It eliminates the use of vulnerable passwords and customers find it easier to use biometric than remembering passwords for different applications and emails, log in and others. For the providers, it would be easier to track which users are accessing specific networks and applications,” says Abhishek Rungta, CEO & Founder–Indus Net Technologies, a global Award Winning IT Outsourcing Service Provider.

Verint’s recently concluded Digital Tipping research-2019 showcased that 61% of the 2000 digital first Indian customers were agreeable to authorize a payment or verify their identity using voice recognition. Thanks to smartphone adoption, biometrics recognition is no longer a far-fetched concept. Voice biometrics and identity analytics can offer the necessary technology to facilitate VR banking as the automation tools can expedite authentication and augment fraud detection.

“Voice biometrics can replace the array of security questions which follow mobile number authentication. Proposed identity authentication to make VR banking a reality can use voice biometrics to verify callers in real time passively, without requiring a password to be spoken. This can make authentication faster, easier, and more secure than traditional authentication methods. Fraud detection is another arena where biometrics can play a key role, which becomes all the more important as Indian customers are just beginning to rely on self-serve channels,” says Anil Chawla, MD, Customer Engagement Solution (CES) Verint, a global leader in Actionable Intelligence®.

While biometrics face their own obstacles including widespread adoption, customer comfort using the technology, and hacking concerns, biometrics are poised to play a key role in banking, technology and security in the coming years.

Enter Augmented and Virtual Reality: The twin technologies that help bridge the virtual world to the real one, albeit to a certain extent. Businesses across the globe are leveraging these technologies and banking is no exception.

“AR and VR technologies hold the promise to potentially transform and bring in disruptive changes, especially to end consumer experiences. These technologies have applicability across varied areas: from retail banking consumer experiences to lending and assisting bank’s employees in back-office operations to insurance claims assessment,” says Jaideep Dhok, General Manager, BFSI, Persistent Systems which builds software that drives the business of its customers; enterprises and software product companies with software at the core of their digital transformation.

It is important to first understand that any adoption of new technology comes with certain additional parameters to look for. AR/VR are no exception. Security and privacy are major focus areas that need to be addressed before we can enjoy the widespread acceptance and adoption of these technologies.

VR applications however are still at a nascent stage with mass adoption yet to take place. We already see multiple applications being built and launched. The VR applications completely redefine user experience. Some sample use cases are a user could analyse spending, bills and transactions in a VR environment, a VR app to browse and buy products in a virtual store, data visualisation tools for traders for wealth management, financial education for employees and virtual branches.

“Talking from personal experience, the bank and payment apps and digital wallets have made it so convenient for me to pay my bills, check my balance, transfer amount, keep track on offers and schemes, and also get all the customer support I require in case any problem arises. I now hardly need to visit my bank anymore. The security is great, and I keep changing my passwords and keys as well, to maintain safety protocols,” Says Taher Mandiwala, Co-Founder and Chief Technical Officer (CTO) at HatsOff Digital Private Limited (a digital marketing company dedicated in energizing brands)

A sharp increase in mobile users combined with convenience and security of performing banking transactions through mobiles, is making mobile based apps very important for banking. With the tech savvy millennial population becoming an important segment of bank consumers who prefer self-service, there is likely to be faster and higher adoption of banking apps.

Apps like “MINT” helps a customer manage his bills and budgets, apps like “REVOLT” enables a customer open a bank account and exchange foreign currencies at real rates, apps like “ACORN” supports one to achieve savings goals and use the savings to make investments based on risk-return combination optimal for the user. Use of digital mobile payment apps like Zelle, PayPal, Goolge wallet, Facebook messenger, Venmo and Square cash is gaining momentum due to ease of paying bills and transferring money to friends and family, through voice commands or chat window. The fintech firms offering these apps, rather than competing with traditional banks, are actually partnering with the banks.

Several banks have been experimenting with augmented reality apps. For example, Axis Bank (from India) has ‘Near Me’ app which provides easy search of ATM locations, finance approved properties; MoneyLion (from Utah) has an app, ‘Grow your Stack’, through which a user can get a visual representation of his balance in bank account. Apps can also provide chatbots for providing banking information and for video conferencing with actual bank representatives. With the technology becoming more affordable, these apps open up opportunities for reaching out to remote areas with banking solutions and achieving higher levels of financial inclusion.

“The popularity of mobile banking apps is probably driving the trend of closure of large number of physical bank branches in US (1,700 closures by the end of 2017). Increasing popularity and sophistication of the apps, will probably lead the physical banks to evolve into hybrid banks,” says Professor Arpita Ghosh, Associate Professor, Finance & Contro group of IIM Calcutta.

Mobile banking has transformed the interactions between banking institutions and their consumers and the intervention of AI, NLP will drive greater personalization between the two. A new study from Juniper Research has found that the operational cost savings from using chatbots in banking will reach $7.3 billion globally by 2023, up from an estimated $209 million in 2019. Chatbot integration in mobile banking apps will be the dominant channel for chatbot-driven customer communications, accounting for 79 per cent of successful interactions in 2023.

“We believe that bots cannot replace the human touch in banking but will help the customers whenever they are confused or steer them through their queries and more. However, functions such as sales and support will still require human intervention. In future, we look at virtual assistants such as Alexa, Siri, Cortana and Echo as bots enhance the customer-banking experience,” says Arpita Ratan, Co-founder at Signzy, a fintech company that makes regulatory processes for banks, NBFCs, and other financial institutions simple, secure, and compliant.

Consumer engagement in banking is waiting to be transformed. Existing virtual assistants like Alexa, Siri, Echo, Google Home and Cortana, can provide users with basic banking experience like checking account balances, making a payment or tracking expenditure, but they lack the ability to identify the decision-context and adopt. Machine learning (ML), artificial intelligence (AI), smart-agents technology, internet of things (IOT), natural language processing capabilities, and sentiment analytics, put together have made it possible to have ‘Robo-Advisers’ or ‘Advanced Virtual Assistants’, who can be available 24×7 to have human like conversations with the customers and act as a ‘private intelligent digital banker’.

“They not only know the customer details (like his spending and saving patterns, credit scores, upcoming payments, but can also anticipate what he needs and wants even before he has expressed the same. They also come with deep understanding of the banking and finance industry and can help users in preparing budgets, planning expenditures and investments, and providing real-time updates about transactions and balances. Such personalised, easy, quick, insightful, and well-served experience brings customers delight and is also more secure than traditional rule-based monitoring,” says Arpita Ghosh, Associate Professor, Finance & Control group of IIM Calcutta.

Rather than bombarding customers with numerous product offers, banks can now serve them with perfectly right products, at the right time through their Robo-Advisers; it can be beneficial for both the customers and the banks. Robo-advisers are less expensive and likely to bring lasting customer loyalty. There are of course challenges like understanding the accent and inability to handle simultaneous multiple questions. Bank of America’s ERICA, JP Morgan Chase’s COIN, Capital One’s ENO, Ally bank’s ASSIST are some of the experiments with advanced virtual assistants.

AI-powered virtual assistants are poised to make banking experiences easier for the end consumer. Virtual Assistants can anticipate and answer typical queries, learn with everyday user experience and provide a unique personalized view to the end consumers. The likes of Google Assistant, Siri and other smart devices such as Amazon Echo, Google Home or Apple Homepod are becoming increasingly ubiquitous in day-to-day transactions.

Banks are increasingly exploring ways to provide banking services through these channels. The deeper insights these channels are able to provide based on other contextual data they generate is unparalleled. It perfectly serves to plug the gap of understanding of why an end consumer does what she or he is doing.

“As highlighted earlier, security and privacy concerns present a few hurdles for wider adoption. Banks are responding by having an intermediate stage with their own bots. Most of the leading banks offer AI-powered bots with customized content to their consumers. With an improved acceptance of cloud and authentication mechanisms, it’s a matter of time before Virtual Assistants, including the Voice Bots, become mainstream solutions,” says Jaideep Dhok, General Manager, BFSI, Persistent Systems.

Conversational Commerce is fast emerging as one of the most important banking applications using IoT. While previously restricted to messaging bots, the definition of Conversational Commerce has significantly expanded, with the arrival of voice-based personal assistants.

“Voice-enabled assistants are the newest ‘must-have’ technology among banking consumers, with Google, Amazon, Apple, and other giants rolling out AI-infused gears, functioning primarily through conversational voice interfaces. Alexa, Siri, and Google Assistant have all become an integral part of a millennial’s day. From setting up reminders, checking the weather, to shopping – these voice-enabled digital assistants have covered most of the bases of everyday life,“ says Suresh Rajagopalan, President, Retail Payments, FSS, a mobile banking, mobile payment, mobile commerce and mobile wallet solutions provider on a pay-per-use model.

Gartner predicts that by 2020, 30% of web browsing sessions will be done without a screen. Increasingly, banks are embracing the technology and interacting with customers through “full-service automated voice assistants.

In the US, virtual assistants have already been integrated by financial institutions like AmeriTrade, Chase, and PayPal with a set of basic features such as the ability to check balance, transfer money to a friend on the contact list using voice recognition and a pin provided the device is on a trusted network (necessary security measures have to be in place).

“We are yet to see Indian equivalents such as Paytm, ICICI or ShareKhan follow suit or come up with their version of personalized virtual assistants. However, a few of our NBFC Startup clients such as StashFIN and MoneyonMobile have requested for an early research on this using the UTI features and application-based banking guidelines released by the US government two years ago,” says Sajeel Khanna, CTO, BluEnt, a design, technology and engineering group to plan workload efficiently.

As technology is evolving every day, it has become easy to replicate real life experiences to a good level of accuracy, virtually making it the next big thing in customer engagement. For example, like in Personal Banking, where the advisor is able to respond and react to the expressions and emotions of the customer, technology can help capture the same emotions and reactions by way of facial recognition as well as eye tracking. These are valuable inputs while responding back to customers either in the service mode or even in the consulting or sales mode. In the VR Banking mode, the bank is almost available to the customer like an assistant who can take instructions, voice or otherwise, and perform those tasks for the user, who otherwise have to click and browse through very uninteresting presentations.

“However, Virtual Assistants will have to evolve to be able to provide privacy in personal banking to really become effective. In their current versions, they are only good for reminders and probably for low value transactions. VR technology like Oculus or Hololens or even Google Glass do provide that bit of privacy but the interactions within each still have a lot to be desired at the moment. New tech adoption only works when things work seamlessly on the first try. Users don’t have patience to try the interactions multiple times to make them work. Also for HMDs (Head Mounted Devices) to really work, the price point also becomes a very important consideration for it to be a mass market phenomenon,” Says Ramesh Krishnan, Senior Vice President and Head Digital, Cloud and Cognitive Practice Delivery, Mphasis.

Oculus virtual reality headsets, originally designed for gamers, is ready to enter banking industry as a game changer. The immersive technology enables a customer to change simulated environment according to his needs and moods through simple physical gestures or verbal commands. It can provide a customer with intuitive multidimensional visualisation and feel of complex financial data and his investment portfolios. So, it changes the way a customer understands the banking products and interacts with the bank and other users.

“Oculus VR, a technology company acquired by Facebook (for $2.3 bn) has been launching virtual reality (VR) headsets like Oculus Rift, Oculus Go. These head mounted display units (HMD) were originally designed for their applications in gaming and entertainment industry. The recent launch is Oculus Quest, a standalone light and comfortable, wire-free headset, providing high resolution touch and display experience,” says Ghosh of IIM Calcutta.

“VR headsets fitted with eye tracking sensors can help infer the expressions on the user’s face. Since the VR headset tends to obscure the face, this method could be the best way to understand human expressions in combination with eye tracking sensors and machine learning algorithms. This technology could make the virtual reality experience more immersive,” says Deepak Sharma–Chief Digital Officer – Kotak Mahindra Bank.

In the present day, virtual reality (VR) holds a tangible and promising future technology title. With VR technology, banks and financial institutions can prepare themselves for the change where consumers have the right of accessing financial services from any place through virtual environment rather than walking up to the physical branches.

“Mortgages, debit & credit cards, personal loans and transactional accounts are the major financial services provided to a customer in personal banking and influence of VR on these services can change the whole banking experience. For instance, VR-based mortgage applications will provide a consumer with a real-time tour of the properties for a mortgage and its cost, graphical data of investment portfolio and many other details.” Says Hiren Bhandari, Technical Director, Mantra Softech (India), a leader in Biometrics & RFID industry in India.

In addition to it, VR technology like Oculus will provide consumer to experience a guided tour of a bank with the assistance for making investments, purchasing a home, obtaining a certificate, getting all information regarding the government investment scheme and policies.

Bringing VR technology to personal banking creates a smooth banking system, eliminating long queues at the physical branches, paperless culture; reduce lengthy process of approvals and offer many more possibilities to enhance personal banking experience.

The introduction of VR technology is ushering a new era of interaction and communication in the banking industry. The next generation of bank and investment customers is moving away from brick and mortar branches and spending more time on their mobile devices for financial planning. Some banks are already utilising VR technology to create virtual trading workstations or VR/ AR applications to help find the nearest ATM.

Though we have seen wide adoption of this technology by the gaming industry, Pokemon-Go being a somewhat recent example as well as the newly released Harry Potter Wizards Unite game, the banking sector is yet to fully benefit from the immersive and rich experience that VR can provide to the customers and even for employee training. VR experiences are ideal for gamifying goals, forging relationships and incentivizing customers to make adequate financial investments for their future.

“At Synechron, we use VR to gamify the investment experience for investors by helping them create their financial journey based on their current financial assets, and giving them a personalised, VR-simulated visual into their future lifestyle. This helps banks customise the products and services they offer to their customers to help meet their investment objectives,” says Faisal Husain, Co-founder and CEO, Synechron, one of the fastest-growing digital, business consulting & technology services providers firm based in New York.

“It is however unlikely that VR Technology will make an impact in the near future as the technology is still too experimental and expensive. VR motion sickness still remains a real medical problem, triggered with the use of VR headsets,“ says Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY.

The last, but perhaps the most important factor is VR hardware technology. There are a lot of players in the market and there is a constant churn in terms of newer devices and experiences. There is an array of options that are being explored by major technology players. These range from Facebook (Oculus) to Microsoft (HoloLens). Google, Apple and Amazon have also made their plans public in terms of what they want to target besides numerous other start-ups.

As the hardware technologies become more immersive, they present an excellent opportunity to target completely new experiences for consumers, both for customers as well as internal employees. Salesforce uses Oculus Rift to create an immersive 3D environment for analysing data. “StockCity” is a virtual world where stock portfolios are turned into a virtual 3D city, where investors can immerse themselves in the data. It is created by Fidelity Labs, a part of Fidelity Investments.

“As it would happen, adoption of any new technologies like Virtual Reality Banking presents both an excellent opportunity and few unforeseen challenges. To add to this, security and privacy of end customers throw different challenges at banks to manage these. There is a growing realization that points towards following a structured governance, risk and compliance procedure to arrest such issues and help bring out the true potential of these technologies,” says Jaideep Dhok, General Manager, BFSI, Persistent Systems.

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However, Hemal Gathani, co-founder ZEUX Innovations, among the top full-circle UX Design and Innovation firms in India, differs. When you come across a new technology, it is important to ask one simple question. What problem is it really solving for the user and the business?

With virtual reality banking, banks have been exploring the idea of helping simplify their solutions, replace branch banking with VR banking, visualize data, provide value-added services beyond banking (e.g. guided tour of steps involved in buying a home, demo of real estate projects etc).

Gathani says, “Let’s look at virtual reality banking from a business point of view.

• Will banks save costs with this new technology? This can be argued. All the things that a bank would want to do with virtual reality, can be done efficiently and at much cheaper cost via other means (e.g. videos explaining complex data or banking products and solutions, having an interactive website etc)
• Will it help increase adoption of digital channels? No. Users would first adopt simpler and easily available tech first before jumping into VR (e.g. register for mobile banking vs buying a VR headset to do virtual reality banking)
• Will it help increase engagement with the users by providing value added services beyond banking? Possibly. But here the bank needs to have a larger strategy in place and look at VR as one of the channels that align with the long-term strategy before jumping into the buzzword bandwagon.

He continues. “Now let’s look at it from a user’s point of view,

• Will it help simplify my life? As an internet and mobile banking user, not really. 95% of a typical user’s key tasks can be taken care of via existing digital channels. For the remaining 5%, users need a human intervention via a phone call or a branch visit.
• Will it be cheaper? No. How much does a VR headset cost? Why would I buy and wear a clunky headset to do banking?
• Will it be faster? Not really. I can finish 95% of my banking related tasks before one would initiate VR banking.”

To summarize, VR Banking will not replace traditional and digital channels of banking. It may help in brand building (if a bank provides value added services beyond banking) and gain some PR for sure. But it will be naïve to expect that VR Banking will be the next big thing in banking,” concludes Gathani.