The article observes and calls out the variety of changes mobile technology and other data communication advances have brought about a reshuffling of a longstanding way financial institutions had done things. The movement to digital payments and banking has significantly lowered the barriers to market entry for upstart organizations to compete with longstanding financial institutions. The migration of more day-to-day business activities to a digital environment reduces or removes some to the constraints of time and location, and as the article points out, makes charging fees for access to funds less competitive with low-overhead digital-resident financial institutions. The author envisions the expanded use of virtual reality will further accelerate the shift away from banks needing physical points of presence beyond ATMs to facilitate most customer needs.
The future of banking is moving towards a more self-service, automated platform. Plenty of banks are investing their capital in mobile apps, Internet banking and expanding their ATM fleet in order to remove the branch as the primary method of banking. Ergo, banks are trying to ensure that their apps and ATMs emulate the services in the branch. The keyword being ‘emulate’. In order to facilitate the transition from bricks and mortar branches to fully virtual branches, we need to be able to do more than what you can do in the branch. For now, both will work side-by-side, but we want to be able to avoid having to build brick and mortar branches in future. But, by using VR, we can combine a self-service platform with a more tactile feel of the branch. You can give the overall experience of the branch (seek advice for mortgages/loans, open accounts etc.) without having to make the investment in brick and mortar. In the future you could even go as far as to create artificial tellers using the motion capture technology currently used in Hollywood films like Avatar.
Virtual reality interfaces may indeed come to play an expanded role in our day to day lives, but Mercator Advisory Group recognizes the need to replicate the existing process in a pure digital environment will not be the final goal, but more likely a way point in the journey. The idea of winning customers through an experience is indeed the case for many business, but we believe that as it relates to banking the ideal level of awareness of actually banking will reduced. Banking as an activity will be less intrusive and be more of a facilitation. The ideal financial institution experience will increasingly be measured on being unobtrusive and personalized. In other words, banking will come to be conspicuously absent as we know it today. The innovations underway with chatbots are indicative of the future of the market, with machine learning enables analytical engines taking directions and asking clarifying questions of clients.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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