One of the biggest criticisms concerning financial technology is the way it isolates us from our clients. Everywhere you turn, people are staring at a screen rather than participating in the interpersonal communication that is so important to the success of our clients.
As is often the case, however, technology can provide effective solutions for the issues it creates - as illustrated by the highly immersive, connective potential of virtual reality (VR).
Viewed as a novelty in the not-so-distant past, VR is just now starting to hit its stride as both consumers and industry are recognizing its wide-ranging applications. In other words, VR is no longer a mere innovative fad but an instrumental technology that heightens our perceptions and ability to absorb information.
If designed in an intelligent, impactful manner - as Fidelity has done with its first virtual financial agent - VR can connect and inform, intrigue and inspire. At Xinn, we couldn't be more excited to see the technology starting to take root in the financial services industry and look forward to watching its transformative powers.
VR at a Glance
Conceptually, the foundation to modern VR technology traces back to the beginnings of stereoscopic projection and, later, the View-Master devices many of us loved as children. Both were designed to create a more immersive experience for the viewer, allowing them to feel as if they were a part of the images and the worlds they created rather than just a passive viewer. Subsequent advances beginning in the 1950s would include wearable devices and the additions of sound and even scent to further envelop the user into a virtual world.
However, it wasn't until the 1980s that the term "virtual reality" was coined. While everything from military training to space exploration used the technology in isolated instances, it didn't truly capture the public's attention until it was introduced by gaming companies in the 1990s to enhance the video game experience.
What we now consider VR - a computer-generated, 3D image and landscape that allows the user to interact with the digital environment through a headset, gloves and other sensor-fitted equipment - is used for a wide variety of applications throughout entertainment and industry.
In fact, as computing power reaches once unfathomable heights and expanded production brings price points down, companies are anxiously looking for ways to improve training, customer service, and prototyping with VR and augmented reality.
VR in Financial Services: A Case Study
With evidence of the vast potential of VR increasing, our friends at Fidelity recently partnered with Amazon to create a VR-based financial agent named Cora. Building on Amazon's existing VR and voice recognition platforms in Alexa and Polly, Cora represents Fidelity's initial investment into what it sees as a burgeoning consumer technology that will soon experience far greater adoption levels.
Client bases, particularly younger ones, continue to grow more comfortable with the notion of interacting with a firm through a virtual environment. To leverage that comfort, Cora can educate clients on important financial principles and strategies as well as present information on performance and asset allocation in an entirely digitized, virtual format. While the technology is still in its infancy stages, at least with respect to financial services, further iterations of the Cora platform will concentrate on specific client segments before being rolled out to a broader audience.
From a compliance perspective, Cora represents interesting challenges as firms like Fidelity strive to simultaneously satisfy client expectations while adhering to an increasingly regulated, restrictive environment that rightfully places absolute importance on data security and privacy.
As the technology progresses, Cora's access to client records along with the ability to present performance detail and even make recommendations will require even more vigilance from firms. Greater measures will need to be embraced to protect clients from yet another vulnerable entry point that the black hats of the world wouldn't hesitate to exploit to their benefit.
A Look Down the Road
Of course, Cora only represents one of the first forays into VR from the financial services industry. Going forward, VR will be used for a wide range of specialized purposes within the industry, rather than just being relegated to basic client interactions. Internally, VR will be a critical tool in training employees with far greater immersion levels in order to improve and expand the learning experience.
Using biometric security measures built into the VR devices themselves, VR can also give clients the ability to actively trade positions within a virtual environment. For instance, iris or retina scanning technology can be used within a VR headset to prevent unwanted users from trading on a client's virtual platform.
This combination of innovation, security and convenience will be especially important to address the expectations of younger clients from the millennial or Gen Z generations. Most of these younger demographics are already extraordinarily comfortable with technology and open to embracing innovation as long as they meet their increasingly specific and demanding expectations.
Prepare Today for Tomorrow's Client Expectations
The constant march of technology will not be slowing down anytime soon. Financial services firms need to start establishing a foundation today to meet tomorrow's client needs. As innovation continues to transform the entire industry - from compliance to reporting and several points in between - VR will be considered the norm at some point in the foreseeable future. As always, Xinn implores firms to start preparing for this brave new world sooner rather than later to maintain their edge and future viability.