Science fiction is becoming a reality as we blend the physical and digital worlds.
The lines between the physical and digital worlds are blurring, ushering in a new era of collaboration across real and virtual universes. For the banking, financial services, and insurance (BFSI) sector, this convergence is already here.
By 2025, Asia-Pacific is expected to have more than 1.4 billion 5G connections, making it the fastest-growing region for 5G globally. This surge in connectivity is enabling organisations to explore extended reality (XR) technologies—including virtual reality (VR), augmented reality (AR), mixed reality (MR), and metaverses — ushering in new ways to operate, innovate, and serve customers.
Yet, organisations are grappling with immense challenges. As AI, blockchain, and big data reshape the industry, many institutions are still burdened by outdated systems and the significant costs of modernisation. Coupled with rising operational expenses, low interest rates, and shrinking profit margins, providers are also under pressure to meet customers’ rising expectations for seamless, personalised digital experiences.
As the use cases for extended reality become more widespread, institutions need to embrace its potential to address the ongoing challenges and stand out among the competition.
Change is already happening
Bank branch closures are accelerating, with over 11,000 expected to shutter across Southeast Asia by 2030, according to a Roland Berger report. Customers have fewer and fewer choices about going online for their banking needs and switching from cash to alternative payment methods.
In parallel, the metaverse is emerging as a new frontier for financial interactions. Cryptocurrencies, predicted to become the primary payment mode in the metaverse, will require institutions to adopt new payment infrastructures and rethink their business models entirely.
XR is also transforming traditional operations. Banks can turn to XR to provide personalised and immersive banking experiences to their customers, with features such as 3D virtual assistants, interactive product presentations, and self-service kiosks. For example, OCBC Bank in Singapore introduced a virtual branch, OCBCx65Chulia, enabling customers to interact with services in an immersive environment.
Similarly, insurers are leveraging XR to expedite claims assessments, which allow customers to use smartphone apps to secure real-time repair quotes while assessors evaluate damages remotely.
But the impact extends beyond customer service. The metaverse generates vast data sets, and when paired with AI and machine learning, institutions can extract actionable insights. These technologies enable predictive analytics, tailored marketing campaigns, and hyper-personalised financial services.
XR is also enhancing investment and trading experiences through real-time 3D data visualisations and portfolio simulations. These technologies support financial professionals in analysing complex data within immersive environments, while customers can better understand financial concepts like budgeting and investing through engaging, interactive tools.
Embracing the future
A report by Deloitte suggests that XR technology can generate cost savings of up to 40% in the financial services industry. BFSIs now need to build upon the momentum in emerging technologies to address ongoing challenges and stay ahead of the game.
As businesses develop virtual spaces where customers can “try before they buy,” financial transactions will follow into virtual shops, showrooms, and premises. Financial institutions will soon face the challenge — and opportunity — of financing and insuring virtual properties and assets, as well as setting up virtual branches where cryptocurrencies dominate transactions.
However, this future is not without risks. 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.
Financial institutions will be able to simulate potential security breaches and train their employees, and in some instances customers, to recognise and respond to them. This could improve the overall security and reliability of the financial system and reduce the risk of fraud.
Engaging with the future now
XR technologies hold immense potential to radically change the way we work, socialise, and learn. The use of XR can enable customers to interact with financial products and services in a more engaging and intuitive way, building trust and loyalty while increasing satisfaction and retention. While chatbots and automation are replacing repetitive tasks, the demand for skilled staff to manage and innovate within these new ecosystems will rise.
For APAC customers, gradual integration of XR into everyday interactions is key. The earlier financial institutions begin incorporating XR features into their services, the smoother the transition to fully immersive experiences will be.
By harnessing these advanced technologies, BFSIs can expedite digital transformation and deliver highly personalised, data-driven customer experiences. In doing so, they position themselves for sustained growth and profitability in an increasingly competitive landscape.
