Will Augmented and Virtual Reality Replace the Bank Branch?

Despite the rise in digital banking, an advantage of branch banking continues to be the value of personal interaction. But, could the benefits of face-to-face interaction be incorporated into augmented reality (AR) and virtual reality (VR) solutions?

By Jim Marous, Co-Publisher of The Financial Brand and Owner/Publisher of the Digital Banking Report

The traditional bank branch network is in a massive state of transition. Offices are shrinking or closing altogether, with digital tools being introduced to support both transactional and advisory roles. But, while more than 8,000 U.S. bank branches have closed over the past decade, and as many as 90% of transactions taking place online, the number of bank employees has remained relatively stable. According to the FDIC, there were 2,110,276 employees in 2012, and 2,043,480 last year. This stability is about to change.

The Bureau of Labor Statistics (BLS) projects that the number of tellers working at American banks will decline by as many as 40,000 through 2024 (from a current workforce of 520,000). The move to digital channels is driving this decline, as bank customers conduct many of the traditional transactions handled by a teller on a phone or their personal computer.

There are many banks and credit unions looking for alternatives for the customers still using branches. For instance, Bank of America is experimenting with hybrid banking, supplementing traditional branch offices with small unstaffed mini-branches, that offer a direct link to branch personnel via video conference. The question is whether these hybrid branches will be replaced by chatbots or at-home banking capabilities that digitize the 1:1 customer experience?

At a time when face-to-face communication can be done on a mobile phone, home computer, or television set, why should a financial institution continue to support a massive brick-and-mortar presence? Especially when Millennials and other digital banking consumers are used to not stepping foot into a branch, the ongoing transition to digital channels is a forgone conclusion.

Branch Augmentation: Chatbots and Voice Recognition

The move to supporting simple transactions with AI-driven chatbots has already begun. The only reason chatbots don’t already dominate customer support in banking is because of the involved nature of many transactions and the infancy of the technology. To date, the use of chatbots has been limited to voice-activated search engine activities and simple transactions. This will undoubtedly change as is all learning technology … quickly.

Banking bots will soon be able to support most banking queries, with 24/7/365 access benefits afforded the consumer and significant cost savings being the driving force for the banking industry. Once the transition is complete for simple teller transactions, will the technology be used for full-function robo-advising as well?

Another significant change is the movement to voice-first technology. USAA was the first to offer limited voice banking, with Capital One enabling banking by voice, connecting via Amazon’s Alexa – embedded in devices like the Amazon Echo, Amazon Dot and newly introduced devices. Capital One customers can check balances, review transactions, make payments and more using simple voice commands.

Bank of America is also working on voice recognition technology called Erica (as in Bank of Am-ERICA), that will allow people to do virtual banking by voice with a computer, similar to how people already use Amazon Alexa or Apple’s Siri. The bank’s Merrill Edge investment service is also allowing customers to use a robo-advised platform to invest without speaking with a human.

Other financial institutions such as ING, Barclays, Santander, Wells Fargo and others are also moving quickly to support conversational banking. Barclays has introduced voice recognition software for their phone customers, eliminating the need for multiple security questions and passwords. Going a step further, Santander provides a service in their SmartBank app that allows customers to verbally ask simple questions about their transaction history, eliminating the need to search manually.

According to Temenous, “With a sophisticated, learning, voice-powered platform able to make app usage, including banking apps, more convenient and user-friendly than ever, the advantages of branch banking will continue to diminish, with stylish, tech-heavy branches unable to compete with the ease of access and scope of emerging digital channels.”

(Read More: Get Ready for the Voice Revolution in Financial Services)

Branch Replacement: VR, AR and MR

Augmented reality (AR), virtual reality (VR) and mixed reality (MR) are the foundation of a 4th wave of computing power that integrates sensors, big data, the cloud, artificial intelligence (AI), and wearables. According to a Bank of America report, “It [AR/VR/MR] has the potential to become the “form factor” for nextgen computing as a universal, smart, and intuitive interface for the internet of things (IoT) ecosystem. It could be the technology that disrupts the rules – bridging the digital and physical worlds.”

Read the Rest of This Article on The Financial Brand ...

To read the rest of the article discussing how AR, VR and MR may replace the bank branch, go to the complete article here ...

Follow me on Twitter

Read more of my articles on The Financial Brand 

Visit the  Digital Banking Report  for the best retail banking industry research