Do you belong to the generation that played video games on Gameboy or Nintendo? Technology did not fail to impress us then, and it does not fail to impress even today.
Virtual reality or VR has a huge potential in the upcoming future. Market research analysts are bullish on the growth of VR technology, with one estimate projecting that 1 billion people will engage with VR and augmented reality (AR) content regularly by 2020.
When we say virtual reality, a lot of people first think of 3D games and VR gaming arcades; however, VR has unconventional usages too, like in the financial industry. The finance industry, specifically in India, is mostly data driven, so an introduction to technology which combines data and virtual reality can give surprising results. Add to this the concept of storytelling, and the results could be astonishing.
For centuries, storytelling has remained a powerful tool for shaping our collective narratives and influencing public opinion. However, the way stories are presented today has witnessed a sea-change, thanks to advancements in technology. This provides an opportunity for financial firms to use the combination of new-age technology and storytelling to create compelling client experiences.
One area where this is seen is wealth management. Evolving client expectations and changing demographics have driven the need to incorporate advanced digital tools that can deliver engaging content to users.
Today, one major challenge the wealth management industry is facing is disengaged investors. This is an area where technologies such as VR can be used to create more engaging, effective and ROI-generating investment experiences. The advancement in interactive computer-generated technology, especially VR has given the wealth management industry the necessary tools to deliver highly-engaging content.
For wealth management advisors, interactive storytelling can be an effective way to educate prospective clients about the importance of financial planning. This new digital reality based on multi-pronged, yet interconnected factors is introducing tectonic shifts in this landscape.
Using interactive storytelling to educate millennials
According to numerous researches (including Trend-setting millennials redefining the consumer story, Alphawise, Morgan Stanley Research and Aspiration index 2018 – Decoding Indian Millennials), millennials today form over 400 million or 1/3rd of the total population in India and close to about 46 percent of the workforce while contributing to about 70 percent to the total household income. This subset also serves as a potential customer for over 90 percent of the millennials make their own financial decisions as generation of wealth is the goal for over 75 percent of millennials.
Communicating the importance of healthy investment decisions and their long-term impact remains a challenge for wealth managers. These challenges are often compounded when the target audience is today’s tech-savvy millennial generation. Exposure to social media platforms and a marked preference for instant gratification often creates challenges for wealth managers to drive home effectively the benefits of a goal-based investment strategy. Younger clients have a tendency to underestimate their future financial requirements. Other challenges include high-risk aversion and insufficient knowledge of various investment avenues.
An encouraging piece of research suggests that nearly half of consumers that are affirmative on buying VR gadgets are in the age group between 18 and 34. As this age group often underestimates its future financial responsibilities, VR tools can help wealth managers drive young investors toward financial empowerment. This is where VR technology and gamification can be leveraged effectively. By educating millennials on how small investments compound over time to yield healthy returns, an appreciation for financial planning can be inculcated among them. Wealth managers also can take inspiration from nudge theory and behavioral science to drive the right behavior.
Leveraging gamification for improved retirement readiness
Since 2014, various surveys have stated that a large number (close to one-third) of baby boomers either had no money for their retirement plans or were not saving adequately to retire comfortably. The onus thus is on financial advisors to communicate effectively the harsh realities to their clients nearing retirement.
A virtual comparison between a low savings rate and high savings rate and the impact on post-retirement goals can be used to nudge clients to alter their retirement lifestyle expectations to prepare for retirement based on the savings they have and not the savings they think they have. Depending then on how far away the individual is from retirement age, he or she might have time to alter his or her spending habits.
By gamifying the investment experience, wealth managers can provide a seamless and memorable experience that builds trust and confidence among baby boomers apart from educating them.
“Whether the target demographics is millennials, baby boomers or somewhere in between, in these cases, VR can assess the investor’s current financial scenario, risk appetite, and long-term goals to create a personalized, VR-stimulated journey that takes them into their financial future.”
Whether the target demographics is millennials, baby boomers or somewhere in between, in these cases, VR can assess the investor’s current financial scenario, risk appetite, and long-term goals to create a personalized, VR-stimulated journey that takes them into their financial future. By offering actionable insights on how adjustments made today can help investors reap benefits in the long run, a VR-stimulated experience can offer an understanding on how clients are positioned against the adjusted goals based on current investment and spending patterns.
Gamifying financial education for higher user engagement
The wealth management industry has been looking for pragmatic solutions that can lead to higher user engagement. Gamification is a key consideration for wealth managers, as they need to find the right balance between aesthetics and functionality. While incorporating gamification into the existing business model may be cost-intensive, FinTech and consulting firms, can draw on their expertise to guide these firms through business case development, user journey mapping and technical execution to help wealth management firms successfully incorporate VR into their existing strategies.
As is the case with every transformative technology, the opportunities coexist with responsibilities. Instead of viewing VR as just an ‘enabler’ that supports core competencies, it should be seen as a strategic element in its own right, if it is applied to solving the right business challenge. VR has the potential to transform the wealth management journey into a highly-immersive, intellectually stimulating experience, one that educates without ever appearing to do so.
Faisal Husain is Co-founder and CEO, Synechron
Disclaimer: This article is published as part of the IDG Contributor Network. The views expressed in this article are solely those of the contributing authors and not of IDG Media and its editor(s).