Virtual reality (VR) and augmented reality (AR) are attracting a lot of attention in tech circles at the moment. It’s not uncommon to hear these concepts mentioned alongside the likes of artificial intelligence and the Internet of Things in any discussion about the technologies that are driving change in the modern world.
There’s no doubt it’s a growing sector, with figures compiled by Statista suggesting that the value of the global VR and AR market will reach US$13.9 billion in 2017, before soaring to US$143.3 billion by 2020.
So far, the reach of VR and AR has been relatively limited, with the technology largely being deployed for gaming and entertainment purposes. For most people, these concepts are not a significant part of day-to-day life.
But could that be about to change? There are signs of these technologies starting to play an increasingly significant role in financial services, with potential use cases including VR-based payments and banking apps.
A new kind of interface?
One characteristic of VR that could capture the attention of financial services providers and consumers alike is its potential to provide an entirely new kind of interface between customers and their bank or financial products. Millions of people are now comfortable using their phone to complete tasks and transactions that once required a visit to a branch, so could VR be the next phase in the evolution of the bank-customer relationship?
In May 2017, French bank BNP Paribas announced details of its rollout of “groundbreaking virtual reality-based services designed to improve and streamline the customer journey”. Among these services is a VR-based app that allows retail banking customers to carry out tasks such as checking their transaction records and going through the steps of a real estate purchase.
BNP Paribas’ real estate arm has also developed a ‘teleportation capsule’, called the POD, which allows prospective homebuyers to get a 3D, 360-degree view of new homes under construction that will soon be up for sale.
According to Bertrand Cizeau, VR and AR tools will gradually become a more prominent part of consumers’ daily lives. He said these technologies provide “new kinds of interfaces” between customers and banking services.
“At BNP Paribas, we’re extremely interested in these new technologies; they are an integral part of our innovation policy, and we firmly intend to draw on them in order to create groundbreaking services designed to further streamline the customer journey and improve the overall customer experience,” he added.
Payments in a virtual world
Some of the latest experiments and innovations in VR suggest that the payments sector could offer the greatest potential for deployment of this technology in financial services.
Payment processing firm Worldpay has been investigating ways to enable consumers to complete credit or debit card purchases while immersed in a virtual environment. It has come up with a prototype payment process that uses the EMV standard and host card emulation to virtualize purchases.
For transactions under £30 (US$39), the prototype functions similarly to contactless payments, with customers tapping a card at a machine in the virtual space. For bigger purchases, Worldpay has created the AirPIN system, which works by showing users a set of numbers from which they select their PIN.
Nick Telford-Reed, director of technology innovation at the company, stressed the importance of payment firms looking ahead to where “the next generation of payments will take place”.
“We have built this prototype to provide a seamless, secure payment option for consumers in a virtual world. The benefits for merchants experimenting with virtual and augmented reality could be significant,” he continued. “As more companies experiment with VR/AR in their endeavor to drive higher customer engagement, they need to consider if VR technology can support purchases as well.”
Another company that has been experimenting with this technology is US-based payment processing provider Payscout. At the June 2017 Money 20/20 conference in Copenhagen, the firm unveiled its VR Commerce app, which enables payments in virtual experiences via Visa Checkout. This is reportedly the first time consumers have been able to shop and purchase physical items in virtual reality, then have the products delivered to their door.
Payscout CEO Cleveland Brown called it a “watershed moment” for payments and VR. “We’ve seen many prototypes and simulations of VR shopping, but this is the first time anyone can experience real commerce in VR,” he added.
Sam Shrauger, senior vice-president of digital products at Visa, said VR could become “the next frontier of digital commerce”.
But what do consumers think?
There may be all sorts of pioneering thinking and development work taking place to merge VR technology with financial processes, but it’s unlikely to lead to any real change in the industry if the general public aren’t onboard. So we have to ask the question: Are consumers ready for VR to be a part of the financial services industry?
Research suggests that opinion is divided around the world. A survey commissioned by Worldpay found that the vast majority (93 percent) of people in China want the option to make purchases in a virtual environment. This compares to less than a third (30 percent) of consumers in the Netherlands and only 35 percent in the UK.
Cost emerged as the biggest barrier to people buying a VR or AR device, with 61 percent of respondents citing it as a major factor holding them back, followed by concerns about the security of payment details stored in a virtual space (42 percent). Mr Telford-Reed said questions being raised about the security of new payment methods is “nothing new”.
“It’s not that long since we were all wary of shopping online or mobile banking,” he noted. “Consumers have the right to be concerned about the security of a new technology like virtual reality. That’s why it’s the role of Worldpay to investigate and innovate around developing payment trends so that we can address these security issues head on while continuing to enable compelling user experiences.”
There is clear potential for further innovation in VR, and financial services could well be one of the sectors where this technology plays an increasingly significant role in the coming years. Early adoption is likely to be driven by young, tech-savvy consumers keen to try out the latest services and experiences, but it will be some time before we see whether VR has the capability to truly revolutionize the financial services industry.
Image credit: iStock/DragonImages