Virtual reality is all the rage this week. Facebook released their Oculus Rift headset and it was announced that the NCAA Final Four basketball games will be live-streamed in virtual reality. This all has the “Wow” factor but the reality of virtual reality is that it leaves much to be desired. It is no surprise that, in our opinion, the technology is over-hyped and out over its skis. We demoed the headset and got nauseated. We then tried to code a virtual reality branch to possibly give customers an “immersive experienced” until we figured out that there is really no need to look above you or behind you when talking to a banker. However, just because it’s over-hyped doesn’t mean that it won’t catch on and there will not be an application for both virtual and augmented reality in the banking industry. We played with both applications for the week and came to some interesting conclusions.
Of the two technologies, augmented reality holds more promise for bankers. Forget helping your customers find ATMs or branches, for a simple 2D Google search can accomplish that faster. Augmented reality excels when you have a mass of data that has a geographic value and bank customers that has a point of physical interaction. This test is important to keep in mind, as if you just have a drop of data, don’t have a point to leverage a spatial or geographic view and don’t have a location to interact with that view, then you are better off not using augmented reality.
Halifax Savings out of London and Commonwealth Bank of Australia have the right idea as they overlay property level information of for offered residential properties. The result is an application where bank customers can walk down the street where they want to live and figure out what is for sale and the details behind the properties.
At CenterState, we figured that if you are going to spend the money, you might as well go after the most profitable customers you can. We took the application and played with a commercial loan application that helps business owners purchase their retail or industrial building by pointing their phone at a location so they can not only see what is available, but see what a possible loan looks like complete with market rates, payments and terms.
This application made some sense because it did allow the user to have a better feel for the spatial relationship of their target building to other locations such as transportation, open space, markets and similar. By setting your investment and property criteria (i.e. maximum payment, cap rate, square footage, age, proximity to freeway, etc.), your smartphone sends a push notification to you when you are physically close to an available property that meets your objectives. Users can then take out their phone and point to get a live feel for both the property and the data behind the property.
Of course, the same could be done for auto loans (by pointing at a car), student loans (pointing to a campus), equipment financing, home remodeling projects or anything else, but at some point it felt like we were trying to solve problems that are not really there.
Unlike augmented reality, a virtual reality is a virtual horse of a different virtual color. The good news is that the set up does not have to be portable so your ability to transfer data and render far off worlds is easier. The question then comes up; do you really need to bank in far off worlds?
Assuming technology can soon overcome the motion sickness factor, which is real; what do bankers do with it? The common thought would be to create a virtual branch to get rid of your existing branch. From an economic standpoint, it would cost us approximately $180k to program a workable virtual branch from scratch which is much cheaper than the normal $1.1mm price tag.
So far, so good but when you start to create the virtual branch world, you soon realize that no one cares about the plant in the corner and there is no reason why you should ever want to see the backside of your banker. Fighting the virtual Orc Varok Saufang in a 3D game we get, but we could not get our head around how an immersive branch experience means anything more than our current online experience. Our customers at CenterState either still want a physical branch or could care less about a branch and really just want to deposit their check and maybe talk to one of our friendly bankers – both of which they can do with our mobile app and FaceTime.
We don’t doubt that the virtual branch will catch on, we are just skeptical of doing it in 360 degree 3D with $600 funny glasses. A FaceTime or Skype modified for banking would solve this problem just fine.
Next to a simulated branch experience, we have played with several virtual reality games meant to simulate financial service-style problems. Games have been created for wealth management advisory and customer service for instance where bankers can have a more realistic experience in dealing with the respective challenges. These applications are interesting, but not realistic enough, to create a two times better experience than just watching video are being presented a scenario. In both cases we felt we were still playing a game, the limitations of such, created its own set of challenges that limited value.
Years ago we created a 3D version of bank investment portfolios modeled as a city where the height of a building represented the yield, width represented inverse price volatility and depth represented exposure amount. Using this version, you could automatically get a feel for how stable your investment portfolio was structured and how susceptible it was to an “earthquake.” Investments that were highly volatile with high yield would topple at the slightest tremor.
The same can be done with a bank’s loan portfolio giving a unique view to help with portfolio construction.
Fidelity Investments have taken this concept and applied it to equity portfolios and have created an application for the Oculus Rift. There is something to be said for this view but the difference of a 3D rendering in 2D and an actual virtual experience is slight.
We would love your feedback as we are confident that there are other applications that we have not thought of. Since the last Oculus Rift developer kit was released back in 2014, we have been struggling to figure out a deep value added application for both augmented and virtual reality. We are still struggling. We have read and talked to many pundits and that have ideas, but we found is they either have never put a code to screen and are unclear as to the complexity of their thoughts, or have not taken a step back to try to figure out a way to solve their problem with existing technology.
We will sum up our experience in both augmented and virtual reality as technology that is looking for a purpose in banking. The applications we have seen are interesting, but not compelling - maybe next year. Until then, we will be content with battling orcs and watching to see how far North Carolina can go in the Final Four (unless we get sick).
Submitted by Chris Nichols on March 31, 2016