In this piece, Nguyen Hoang Trung – Senior Vice President, Deputy CFO cum Managing Director of the Financial Services Solutions Group at FPT Software, looks at the future of insurance marketing online. It’s a virtual world out there.
Author Bio;
Nguyen Hoang Trung (Thomas Nguyen) joined FPT in 1999 as a member of FPT Technology Center for Young Talents. During a long tenure at FPT Software, Trung was recognized for his significant contribution to setting up and growing its Singapore branch – FPT Asia Pacific – where he held several roles including Technical Director, Managing Director, and then Chief Executive Officer, and led the branch to outstanding growth. In 2016, Trung was appointed Program Director at FPT Corporation and received the 1st-class Achievement Medal that same year. In 2017, he served as Senior Executive Vice President of FPT Information System before returning to FPT Software in 2018. He is currently Senior Vice President, Deputy CFO cum Managing Director of the Financial Services Solutions Group at FPT Software.
As the technology to provide immersive experiences advances, financial institutions need to stay ahead of the game, thoroughly examining their procedures to continuously identify areas where emerging technologies might boost client relations and sales, while reducing time and cost to serve. Though many in banking, finance and insurance are dipping their toes into the use of Extended Reality (XR) technologies including Virtual Reality (VR), Augmented Reality (AR) Mixed Reality (MR) and Metaverses, this is technology that is evolving at lightning speed.
The planet’s biggest corporations are pumping billions into the development of metaverses and all of the associated technology bringing about rapid technology advances and lowering entry costs. As the use cases for extended reality become more widespread in all market sectors, customers, and staff, will expect these kinds of features in banking, finance and insurance. Institutions that implement now will stand out among the competition and reap the benefits, those that delay may find the market has moved and left them too far behind to catch up.
Change is already happening
Bank branch closures continue apace; between 2012 and 2022, the total number of bank and building society branches in the UK fell by 40% and ATM machines have dropped by around 20% in the last five years. Customers have less and less choice about going online for their banking needs and switching from cash to alternative payment methods. The trend was set when, amid the global pandemic in 2020, mobile and digital wallets became the most popular point-of-sale (POS) payment method, mobile payments accounted for 32% of all transactions in the UK in 2021 ahead of credit cards (22.4%), debit cards (22.3%), and cash (20.5%).
Cryptocurrencies are being predicted to become the primary mode of payment within the Metaverse, which will require financial institutions to adapt to new payment methods, and possibly in the real world, which will require financial institutions to rethink their very existence. Expectations are being driven by other online experiences. People increasingly expect their banks, insurers and other financial services to be up to date in how they deliver their services and interact with customers and staff.
A survey conducted by Accenture found that 91% of financial services executives believe that XR technologies will be important to the future of their business. XR technologies are transforming the way banking, finance, and insurance companies operate. The Metaverse generates vast amounts of data that can be analysed to gain insights into customer behaviour and preferences; by integrating XR with AI and machine learning financial institutions can use this data to develop more targeted marketing campaigns and offer more personalized and predictive services to their customers.
Banking institutions are adopting virtual branches and customer service centres, which use VR and AR to provide personalized and immersive banking experiences to their customers, with features such as 3D virtual assistants, interactive product presentations, and self-service kiosks. Insurance companies are leveraging XR to detect fraud and assess risks with greater efficiency and accuracy; for example, customers using a smart phone app to get instant repair quotes and enable assessors to view damages and losses in real-time. By using AR and MR, insurance companies can create virtual simulations to show how a fire or flood could affect a property, and provide recommendations for how to mitigate those risks.
XR technologies enhance investment and trading experiences in training staff, and customers, by providing real-time 3D data visualizations, portfolio simulations, and predictive analytics interacting with data in an immersive environment. Financial professionals can experience simulations of complex financial transactions and how to present them, as well as interact with virtual customers to learn about customer service techniques. Customers can have engaging and interactive educational experiences, helping them better understand complex financial concepts like budgeting, investing and retirement planning.
More change is coming quickly
As the sectors become more sophisticated and customers aspirations and expectations advance, we can expect to see more consumers accessing virtual banks and financial institutions, where they will interact with virtual advisors, tellers, and managers in a virtual environment. This could enable more personalized and immersive experiences, such as 3D data visualizations, interactive simulations, and manipulation of real-time financial market data. Investors will expect to see real-time updates on the performance of their investments, analyse market trends, and adjust their portfolios using intuitive hand gestures and voice commands.
Financial institutions will be able to simulate potential security breaches and train their employees, and in some instances customers, to recognize and respond to them. This could improve the overall security and reliability of the financial system and reduce the risk of fraud. A report by Deloitte also suggests that XR technology can generate cost savings of up to 40% in the financial services industry, while a PwC report suggests that AR and VR technology can reduce training time by up to 70% and improve employee performance by up to 30%.
XR and metaverses are already starting to change the retail environment both in the physical high street and online. Payment transactions need to be smoother and simpler, which requires financial service providers to collaborate with their commercial customers to develop new systems for taking orders and payments, as well as handling refunds for returned goods. As businesses develop more virtual situations where customers can try before they buy in a virtual world, transactions need to follow them into the virtual shop, showroom or premises, for which the businesses will be buying virtual property and stock, which may need financing and insuring. Only one step before financial institutions need to consider setting up branches and offices in virtual worlds, where most of the transactions are predicted to be in cryptocurrencies. As the Metaverse grows, so does the potential for fraud and other risks; financial institutions will need to develop new risk management strategies to protect their customers and their assets in the Metaverse.
Share in the growth
The XR market is expected to be close to 300 billion U.S. dollars by 2024 according to Statista and Mordor Intelligence forecasts 464 billion U.S. dollars by 2026. Technology strategic planners need to consider how best to compete for a share of the growth opportunities and everybody in business needs to consider how XR will impact their competitive position. This technology has a very high potential to radically change the way we work, socialise, learn and take our leisure. Even though the XR environment is virtual, the interaction with people or things is real; it allows us to enter a virtual world and simulate a wide range of complex scenarios or overlay information on the real world. With the use of XR, financial institutions can enable customers to interact with financial products and services in a more engaging and intuitive way, to build trust and loyalty, increasing customer satisfaction and retention. Everything is possible and the only limitation is our imagination.
Engaging with the future now
Chatbots, artificial intelligence (AI) and robotic process automation (RPA) are replacing the mundane jobs in the finance sector but staff need to be retained through training and upskilling to take up the more exciting and rewarding jobs being created. The new jobs in customer engagement will, down the road, involve the various tools of XR, so the sooner they are familiarised with these tools in their training the better. They also need to feel engaged in the team and in the promotion prospects, even if working from home, by participating in virtual meetings and creative sessions.
Customers too need to be gradually engaged and made comfortable with the virtual world in their financial life. So the sooner financial institutions start the process of introducing elements of XR into the interactions with customers, the easier future transitions are going to be. The obvious starting point is product and data presentation related to day-to-day financial transactions; gamification and augmented data visualization will educate customers and enable what-if scenarios and multiple choices. Then perhaps moving on to dealing with a virtual assistant or entering a virtual branch. They may also have to be introduced to new concepts for their businesses such as crypto-currencies and Non Fungible Tokens (NFTs). All this leading to higher levels of customer engagement and retention.
All interactions generate data and XR helps make the data more accessible and easier to interpret, providing richer customer insights, more customised experiences and more relevant marketing.
Versions of reality
The cost of hardware and implementation is reducing rapidly. Science fiction is becoming reality as we learn to work together in the real and virtual universes where the physical and digital worlds can blur and merge. Financial institutions and businesses can work together to develop new financial products and services, conduct research and development, and share expertise. The examples above are the tip of the iceberg. The future is now, fast changing and very exciting.
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