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.

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