Compared to other industries, applications of AR/VR in financial services are few and far in between. Below I will give a quick overview of the applications, their challenges, opportunities and zoom in on my former employer, Bloomberg, and its experiment with AR.
Applications of AR/VR in financial services include data visualization, financial education, wealth management and retail banking. Data visualization applies more prevalently in trading. Traders are notorious for having 8 screens filled with charts and numbers being updated instantaneously with new market movements. Bloomberg’s clients are known to be obsessed about real estate on their screens. With AR/VR, information can be displayed in 3 dimensions, they are no longer constrained to monitor screens, and traders could interact with the information in a futuristic manner.
Just watch the first few minutes of Citi’s simulated trading platform using Microsoft HoloLens.
The main challenge for adopting AR / VR for trading is the industry’s low latency requirement and the processing power needed.
Financial education, similar to other types of education, can leverage AR/VR to create immersive and transformational experience. Financial literacy is lacking in the US as young people establish their financial lives with lots of debt and not a lot of knowledge how to handle them. In the same layman’s terms and relatable analogies that companies such as DollarsEd employs to explain compounding interest, AR/VR applications could make learning personal finance more fun and enjoyable, especially in a gaming environment.
Other traditional financial services applications include Wells Fargo’s experiment with their Google Glass app reading an item’s price and overlaying in real time whether the customer’s bank account can afford it, or creating virtual branches. These experiments are nascent and adoption potential is unclear and probably not applicable to the masses due to high initial cost of hardware.
Michael Bloomberg, taking his severance package from Merrill Lynch, created the first trading platform to be adopted widely on Wall Street. The initial Bloomberg was a physical computer screen and keyboard that displayed securities prices, a big leap from over-the-counter, over-the-phone trading on Wall Street, enabling price discovery for the first time. Overtime, the product is sold as a software-as-a-service subscription and is used pretty much by all capital market participants. Each subscription comes with a Bloomberg colorful keyboard. A small revenue stream comes from the leasing of hardware, monitor and CPUs. Bloomberg also has leveraged their strengths in data aggregation & analytics to expand into law, competing with LexusNexus, sports, etc., also sold as a SaaS but at different price points competitive with respective markets.
Bloomberg’s value creation varies depending on its clients. Till this day, the terminal is sold as a single package, consisting of 30,000 different screens, or analytical, pricing, data functionalities. For example, typing WEI on the Bloomberg’s command brings up global equity market indices. Whether the clients use Bloomberg for its chat network that is most expansive on Wall Street, or to conduct sophisticated options pricing, or to trading credit-default swaps, they all pay $25,000 a year. For the most part, Bloomberg is bought usually to participate in its chat and email network, get access to its comprehensive market pricing, and sometimes as a “trophy” by individual investors.
Most of Bloomberg’s contracts are two year at $25,000 a year, automatically renewed and billed in advance. Bloomberg employs a large salesforce, each salesperson is an account manager and new business salesperson in one. Most sales at Bloomberg are upselling in existing accounts, due to its expansive footprint. Bloomberg’s salespeople are expected to spend 50% of their time with clients, allowing them to be the first to hear about competitive threats, increase stickiness of product and find upselling opportunities. Bloomberg also has data feed services sold to enterprises and other risk management solutions that have front user interface and backend processing that plugs into current systems at clients.
Being one of the biggest two players in the financial information space (the other one being Thomson Reuters), Bloomberg is very well-positioned to innovate. Having 16,000 employees worldwide, Bloomberg is still a private company, and facing a lot of competition in all of its markets by niche players with lower price tags and more defined value propositions. Bloomberg maintains a lab where clients are frequently invited in to test functionalities while their eyes are tracked to refine UX.
My recommendation for Bloomberg’s AR/VR strategy is to experiment AR/VR data visualization in historical analytical tools where a low-latency connection to the market is not needed. Its target client being enterprise makes it easier to overcome the high hardware cost that would be a barrier for any consumer facing application. For most clients with 3 terminal subscription or more, Bloomberg also sells a dedicated line that connects the computers that host the software to Bloomberg server on the cloud; it can leverage this existing infrastructure to experiment VR/AR trading service for a small group of clients and learn the bandwidth and processing power needed for the service at scale. As hardware cost comes down, Bloomberg News could leverage the technology to create and broadcast immersive stories. No matter what it does, Bloomberg needs to start experiment with VR / AR as it needs to prove that it is still the industry leader, a technology pioneers, to maintain its brand with clients and prospective hires.