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April 22, 2022

AR will facilitate the next step in digital banking

Augmented reality (AR) is a technology that allows the user to see the real world overlaid with digital data. The integration of AR into financial services will help banks remain competitive and desirable to consumers.

AR-related technologies are set to become the next incarnation of what the modern internet can and should be, enabling highly personalized and human-like interactions in banking. For example, AR is a key enabling technology for the metaverse, a virtual world where users share experiences and interact in real-time within simulated scenarios. Understanding the implications of the technology for product and experience design will ensure consumer behavior does not outpace the banking channels’ capabilities.

Enhancing the digital banking experience

As banking continues to transform rapidly in the face of disruptive fintech companies and the COVID-19 pandemic, banks need to be proactive in adapting their strategies and processes. The integration of augmented reality (AR) into financial services offers the potential for banks to enhance the customer experience in various ways. For example, through innovative marketing, virtual payments, virtual training, and different types of rich remote advisory support and home working arrangements.

Many financial institutions have developed AR and virtual reality (VR) apps to improve the customer experience. For example, BNP Paribas launched an app allowing retail banking users to access their account activity and transaction records in a VR environment. AR can also be used for robot advisors to have a more intuitive visual of cash flow forecasts, or what-if analysis when running through investment options. For example, Westpac Banking Corporation and Current provide financial data visualization and budgeting through smartphone-based AR. As banks begin to recognize the importance of innovative digitalization, more use cases of AR in the industry will emerge.

AR – banking in the metaverse

The metaverse offers possible ownership of digital properties, a new ecosystem of digital content creation, and monetization. AR technology offers opportunities for banks to insure and lend against cryptocurrencies, NFTs, and virtual real estate. In late 2021, Nike acquired RTFKT, a company that creates virtual sneakers and collectibles for the metaverse. Along these lines, banks may be able to offer virtual loans to pay for virtual goods.

The role of AR in training is already well established, and the metaverse will provide an interactive platform for this to continue. Banks in South Korea (such as Hana Bank and KB Kookmin Bank) have already launched financial centers where staff virtually walk around office locations, chat with each other by the watercooler, and deepen social bonds between geographically dispersed teams.

Korean banks have also been developing simulated environments for their customers to access banking services virtually, as demand for non-face-to-face environments has increased. KB Kookmin Bank recently developed the KB Metaverse VR Branch Testbed, enabling customers to access banking services virtually in the metaverse. Customers will be able to interact with an employee-avatar in the metaverse to conduct banking transactions, receive advice on investment portfolios, and analyze risk-return profiles.

As more customers access banking services through their mobile devices, Korean banks have taken an interest in providing interactive and engaging digital experiences for their users, in particular for their Gen Z and millennial customer base. GlobalData predicts that global AR revenue will reach $152 billion by 2030. As AR continues to develop, it will play an increasingly important role in the financial services industry.

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GlobalData Thematic Research
GlobalData Thematic Research