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How banks are using virtual reality

Virtual reality has emerged as a hot topic in banking with the rise of artificial intelligence, innovation labs, and the death of the physical bank branch. There’s a way to tap into the mind of the customer through VR, but how it should fit into the business is still a mystery for most.

Venture capital funding in VR totaled $2 billion from 2015-2016, according to Digi-Capital and revenue from VR is expected to hit $162 billion or more by 2020 from $5.2 billion in 2016, according to IDC Research.

It’s still early for banks interested in bringing VR into their business. And like any new technology, VR is going to face some opposition before it’s more widely adopted across financial services. Just because banks can use it, doesn’t mean they should use it everywhere, or at all. Banks are experimenting with how to use it, when it’s appropriate, and who their partners will be. One thing is for certain, though: if customers like it, banks will want it.

“Banking customers have rarely seen a channel or a way to interact with a bank that they didn’t like,” said Raja Bose, global retail banking consulting leader at Genpact. “Branches, contact centers, online, mobile; banks are now letting customers interact with them via social media. The more ways you get consumers to touch their banks the better and there are always going to be some consumers that like it and want to do it.”

However, some banks have dabbled in the technology already. Below are examples of three banks’ brushes with VR.

BNP Paribas
On Tuesday, the French banking giant BNP Paribas introduced a VR-based app for retail banking that allows users to virtually access their account activity and transaction records.

The experiment is perhaps the first to actually touch the financial services parts of banking, unlike the marketing approach banks like Citi and Wells Fargo below use to cultivate their brands.

“Banking concepts and savings and saving for retirement — all this stuff is often very intangible,” Bose said. “You’re not buying anything, you’re not walking out of a branch holding something. To some extent VR becomes a way of helping customers get a little more tangibility. Virtualizing is a good tool for visualizing data. If you can come up with a way of showing how the $100 you save today turns into a big pile of money in 20 years it might make it easier for people to grasp the concept.”

The bank’s real estate arm also partnered with French startup Vectuel & RF Studio to develop “the POD,” a teleportation “capsule” that allows people to step inside and view new apartments and buildings under construction or for sale in three dimensions and in 360 degrees, and move through the journey of a real estate purchase.

BNP did not respond to requests for comment by deadline.

Citi
Citi has a partnership with Live Nation and NextVR to produce a series of live virtual reality concerts as part of its “Backstage with Citi” initiative, which rewards its cardmembers with such events. In this case, fans are transported with VR headsets to live shows and “backstage experiences” with some of the most popular artists.

It also has a longstanding partnership with NBC and the Today Show where it presents a concert series and did the first ever VR concert livestream on the Today Show.

“We took requests from consumers and had 30,000 requests for VR headsets,” Citi’s chief marketing officer, Jennifer Breithaupt, recently told Tearsheet. “We gave those away and people were able to experience that show live from Rockefeller Plaza but also experience it from home as if they were there.”

Wells Fargo
Developers at Wells Fargo Digital Labs are working on integrating VR into next-generation financial services. Digital Labs, a 1,700-square-foot facility in San Francisco with virtual reality headsets, high-definition touch screens and video conferencing, was founded almost 10 years ago as an online-only “space” to showcase and demo new technologies for customers, executives and other employees.

Last year, Wells also went on a “Together Experience Mobile Tour,” which hits music festivals, sporting events, pride festivals and other cultural events nationwide. Along the tour the bank allows people to experience memorable and engaging activities, like “Treasure Quest,” a virtual reality challenge that takes users through the brand history of Wells Fargo, beginning in the 1860s. Users are greeted by a virtual banker at the start of their journey and then challenged to Gold Rush-era activities like gold panning. Users are directed to Wells Fargo ATMs throughout the quest and need to complete their challenge to return to modern day.

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How BNP Paribas is targeting millennials on Snapchat

Banks are testing the waters on Snapchat to reach its young user base. This week, BNP Paribas, France’s largest bank and one of the world’s biggest, went full steam on Snapchat through a global partnership with the app’s parent Snap Inc., the first such arrangement for a European bank.

“The plan is acquire more millennials for our employee base and understand how we can interact with this new generation,” said Romain Chapron, the bank’s digital media partnerships manager.

The challenge with Snapchat is to create content that holds users’ interest. BNP is featuring its employees in short videos that show potential recruits what it’s like to work at the bank and doing Snap ads to promote the bank’s products. It’s also using lenses and branded geofilters that highlight sponsored events such as the French Open tennis tournament. The campaign will run for a year, and the videos will be posted daily on BNP Paribas’ Snapchat channel. The company said its ads will be posted in live stories and Discover channels, and where relevant, cross-posted to Instagram, YouTube and Facebook.

The bank has maintained an active presence on Snapchat over the past year, and as part of recruitment campaign last fall, churned out weekly videos from its Snapchat channel. The videos emphasized work-life balance and fun. The bank also took part as an influencer in #CampusStories, a Snapchat guide for students studying abroad.

BNP Paribas Snapchat video posted to YouTube

For the Snapchat partnership, the bank is producing some of the videos in-house, while using agencies including Publicis and Havas for others.

“We have to deploy a fun approach in tone of voice, which is something new for us as a bank, and we have to be very creative,” Chapron said. 

BNP Paribas launched similar arrangements with Facebook, Google, LinkedIn and Twitter two years ago.

It’s smart move for bank to develop a presence on Snapchat before going deep on the platform, analysts say.

“Millennials have been very guarded with brands encroaching on the Snapchat space, and brands have to very careful on how they engage on the platform,” said Christopher Barnes, managing director of Market Strategies International, a market research firm that focuses on the financial services sector. “They’ve done a good job producing relevant content, and again, ramping up.”

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BNP’s Petra Wikstrom: The human-robot hybrid is the way of the future

For Petra Wikstrom, a quant at BNP Paribas, soft skills are as important as technical know-how. As the current global head of the bank’s execution and alpha solutions team, Wikstrom does transaction cost analysis for institutional investors and corporates.

Wikstrom has a doctorate in turbulence in fluid dynamics from the department of mechanics at the Royal Institute of Technology in Stockholm. For quants, an organization’s financial engineers who typically specialize in applying mathematical and statistical methods to financial and risk management problems, it is now even more imperative to keep an element of human engineering present in a business that relies heavily on technology, she said.

It’s a nod to a lot of familiar industry talk about robo-advice and the need to maintain a human touch through human interaction. Recently, BNP Paribas’ wealth management arm launched a mobile advisory service for its high net-worth clients whose biggest sell was a human advisor – at a time when most companies are touting robos. But in currency trading markets that run mostly on technology, Wikstrom says internal qualitative development can help deliver analytic content the right way. Tearsheet spoke with with Wikstrom about taking a human approach to an increasingly technology-driven world, both in the services BNP Paribas provides and in her leadership role.

petra

How is technology driving the business?
A core part of what we see of development in the market is having access to systems and tools to get information about market liquidity and managing your own execution as it is live. Our automated FX execution strategies employ an adaptive execution technology, and also puts control at the fingertips of the investor to allow them to pilot their execution. We also focus on education around market liquidity and its structure, and access to people and experts. The two go hand in hand.

How has your background prepared you for this role?
My background has naturally helped me speak the language of a lot of our quant developers who have similar backgrounds. What I also really enjoy is human interaction, working with people and our clients. Bridging those two passions – the technology expertise while understanding what people need and how to ask the right questions – is a core aspect of my day-to-day work.

Speaking of that contrast, who will win the future – robots or humans?
The hybrid model is the way of the future. The pendulum might swing one way or another as we go along but it will be very clear for the industry that many problems will require some form of tailored needs and help investors to understand what any technology is and isn’t solving for them. The hybrid model is very similar in nature to an engineering approach where you essentially identify the need for improvement of process, what product or technology is best suited, and finally highlight what areas are not covered. There will always be the need for a human engineer or the expert that will know what solution fits and in what context.

What’s one of the hardest parts about your job?
Learning something new everyday is the challenge that I truly enjoy. Automation is accelerating the financial services industry in many aspects – and it’s not just in finance, it’s across industries affecting our day to day lives. There is a lot of information and we have to constantly keep on top of new technologies, keep abreast of what’s going on, and how this fits into the broader market. The focus is about getting access to the right information and what to do with it. We only have 24 hours a day.

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Bank bots, move over: BNP Paribas is putting human advice before robots

BNP Paribas is rolling out a new digital investment tool — one where the advice is written entirely by humans.

It’s a departure from most of the new digital advice offerings that have emerged in the last couple of years; it’s not a robo-adviser — it’s not even a robot-human hybrid. It’s just a core service for the French banking giant’s high-net-worth clients brought to the mobile device. It might seem a little behind the times, but banks generally don’t apply new technologies to old services overnight, and that sort of caution is particularly applicable to BNP.

The new offering from BNP, called myAdvisory, offers message-based financial advice through the bank’s mobile app, based on clients’ portfolio and risk preferences, financial recommendations as frequently as the client allows and a chat-based trading platform. BNP is at the beginning of a slow rollout, beginning with the clients who provided the feedback on which it built the offering.

The bank has a system that monitors market activity and alerts a team of advisers when something happens that might have a significant on a client’s account, said Salvador Vidal, global head of products and services marketing for BNP’s wealth management unit. Those advisers then send that information to a team of relationship managers, who then message the affected clients, deliver that information and ask: Do you want to follow this advice?

“We’re monitoring and learning from the [customer] usage what kind of channel they prefer, when they prefer it. … We have a very open approach to that,” Vidal said. “We don’t want to take steps and force an offering on clients who don’t want it. We’re committed to co-creating products for clients, giving them those tools and, as they use those tools, making them evolve to fit their needs.”

That’s why while legacy banks and startups alike are rolling out artificial-intelligence-powered robots that dole out algorithmically created investment advice or AI-powered chatbots. BNP is just giving clients anytime-anywhere access to a human adviser. It doesn’t currently offer a robo service but has not ruled out future plans to do so.

Just as the mobile device truly disrupted the client experience in basic banking and gave customers “the mobile banking experience,” wealth management services should be following that path, said April Rudin, chief executive of wealth management marketing firm The Rudin Group.

“This is mobile wealth management, and I think that doesn’t exist,” she said. “Most wealth management and financial services firms don’t mimic and break out the client experiences like a luxury brand does. This is really an upset to the client experience and demonstrates that BNP has changed the experience instead of changing the products or services they offer.”

Citi actually revealed a mobile-first retail banking experience in December for its Citigold credit card members (clients with qualifying balances of at least $200,000) that includes access to investment with a click-to-call button for immediate access to their financial advisers. It’s not a messaging-based service like BNP’s though.

But the focus is the same: high-net-worth clients are global, mobile and want to talk to an adviser when they want to. Some want a self-service model – a robo-adviser – but probably not for their entire portfolio, and existing wealth management firms are so paper-oriented they can feel a little clumsy or antiquated compared to the smooth, fast digital experiences customers are used to today. That’s the experience BNP is trying to change.

“One thing we share with the luxury industry is the clients; we have the same clients. We’re aiming to transform the experience we give them so they understand we are what we are, which is also a luxury brand. That’s the reason why we launched this whole solution.”

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Insurers cautiously foray into IoT territory

Insurance is a simple business: the better you can calculate and price risk, the more money you make. To do that, insurers aggregate their policyholders into predefined categories that historically correlate with certain risk levels. Risk at the policy level is pretty passive.

But what if insurers could move away from the aggregate and into the personal? What if they could calculate the risk for each person individually? What if premiums could go up and down in real time as risk changes? Now that would be a bonanza!

Despite the huge potential, both insurers and consumers are still just testing the waters when it comes to IoT-enabled insurance policies.

The first insurance line to get the IoT treatment was auto insurance, as early as 10 years ago. Most auto insurers have some sort of IoT-powered policy. Consumer response, however, has been lackluster.

IoT-powered policies until now were somewhat of a pilot or proof of concept, said Norman Black, EMEA industry principal consultant, insurance practice for SAS, a business intelligence and data management software and services company. “The industry is now preparing to scale,” he added.

Insurers are increasingly offering IoT-enabled policies for home and health insurance, as well. John Hancock’s life insurance, for example, uses Fitbit data to reward policyholders for healthy living. Healthy habits, such as going to the gym, earn points for the policy holder. At year’s end, one’s “Vitality Status” is calculated according to the number of accumulated points.  The higher one’s status is, the more he can save on premiums and rewards.

French insurer, AXA is partnering with IoT companies to pilot use cases for a connected home insurance. BNP Paribas Cardif also has an Internet-of-Things insurance offering. Beam Dental’s dental insurance uses a smart-toothbrush. A brushing score, measured by how well one uses a toothbrush, can earn up to a 16.1 percent reduction in premiums.

“We are at a tipping point and people will start responding to the offers,” Black said, noting he expects IoT-powered policies to reach a 50-60 percent adoption rate in five years or so, up from two or three percent currently.

Market acceptance of IoT-based policies hinges on insurers’ ability to process and leverage the data collected from policyholder’s devices.

“IoT takes data management to a different level. This really is BIG data,” Black said. IoT forces insurers to filter, process and react to data in real time. To illustrate the colossal effort that is needed to power such a shift, one should consider that insurers currently collect just a handful of data points about each policyholder every year. Collecting and processing real time data across the entire policyholder base will require a complete change to IT infrastructure and perhaps, a reorganization of human capital to support it.

From the consumer side, adoption will probably remain low until insurers have the full capabilities to make those offerings robust and enticing. With low consumer  demand, the upfront investment might not be justified. It is somewhat of a chicken and egg dilemma.

IoT-enabled policies will not just impact risk assessment and underwriting, but will also change the relationship insurers have with their policyholders, moving from a passive relationship full of friction to a continuous and beneficial one.

The data collected from IoT devices can provide insurers with many more possible touch points with policyholders, including elements of gamification, alerts or cross-selling.

Though adoption levels are still low, many feel the move towards personalized risk assessment powered by IoT is inevitable. “If the insurance industry does not do it, someone else will,” Black said, adding that many of his client are working to expand the scope of such offerings.

“They don’t want to be uberized,” he concluded.