Did you know that virtual reality (VR) and augmented reality (AR) have the potential to deliver a $1.5 trillion boost to the global economy by 2030?
Augmented reality enhances the real world by displaying images, text and information on device displays, like Google Streetview or Pokémon Go. Virtual reality generates a virtual environment or projection, creating a realistic experience that doesn’t exist in reality. Users most often enter this virtual reality by wearing VR goggles.
More and more companies choose to include AR and VR in their business reports to enhance shareholders’ experience. The pandemic-induced acceleration of technology adoption altered the fundamentals of many business aspects and corporate investors expect a company to utilise innovation.
Join us and explore how VR and AR could streamline manual processes in finance and aid companies’ corporate reporting. Let’s start with a refresher course on the definition of corporate governance, corporate reporting and financial reporting.
Let’s start with corporate governance, which refers to a corporation’s accountability towards its stakeholders to promote and protect their interests. Corporate governance should include a set of processes and systems that balance social, economic, individual and communal goals.
Corporate reporting demonstrates how a company works to meet these goals, including mandatory and voluntary disclosures to add value to the stakeholders. The Annual Corporate Report is a comprehensive document intended to provide information about a firm’s activities and financial performance throughout the preceding year.
The main types of auditing and financial reporting relevant to corporate governance include:
- Income Statement
- Cash-Flow Statement
- Balance Sheet
- Statement of Capital
- Auditor’s Reports on financial statements & corporate governance
- Accounting Policies
- Corporate Governance Statement of Compliance
- Chairman’s Report
Corporate financial reporting is an important activity for all businesses to provide investors and creditors with information for lending or investment decisions.
When was the last time you dealt with physical money to process payments? These days all our money is virtual. We store it on bank cards, online accounts and our mobile phones.
Therefore, it’s only natural that the finance industry follows suit and introduces virtual and augmented reality to keep up with new customer demands. While these technologies are not that common yet, current ways companies use them include:
- Data visualisation –– as the financial industry becomes more complex, companies can leverage AR and VR to make it easier and faster to visualise and organise large amounts of data.
- Virtual trading –– Some companies make trading a virtual experience by creating virtual reality workstations. For example, Citibank uses Microsoft HoloLens to give traders Holographic Workstations.
- Security –– To create a more secure customer experience, companies could introduce biometric security, an AR system that could connect with a VR world. Customers could then use these systems to access VR bank services, make ATM transactions, or make payments.
- Customer service –– Many financial institutions use AR and VR to improve customer experience. Several banks have AR apps that help customers find the nearest banks and ATMs.
- Recruitment and training –– To provide high-quality services to customers, financial institutions need to recruit top talent and train all employees to master technology and accounting software to the best of their abilities. Some banks use VR to show tech recruits how innovative and tech-savvy the company is.
As you can see, the world of AR and VR already impacts how financial institutions interact with customers, train employees, provide services, and manage data. But what about corporate reporting?
A recent report by the Financial Reporting Council (FRC) explored how VR and AR will impact the business world in the near future. Specifically, where these technologies are present already and how companies can leverage them to enhance corporate reporting.
Event-based VR & AR
Scheduled events like shareholder meetings or AGMs often drive company reporting. While more companies incorporate video and other media into their presentations for such events, AR and VR are not widespread yet. However, some companies, like PWC, do leverage these technologies to create a personal and memorable experience.
Insight VR & AR
Management meetings and site visits are excellent ways for investors and shareholders to gain insight into a company’s operations. However, the pandemic has prevented in-person meetings and visits, which calls for alternative ways to provide product and operational insight. Here, companies can leverage VR and AR as a substitute for physical meetings while demonstrating the ability to master technological innovations.
Aspirational and Narrative VR & AR
Corporate reporting is essentially about creating a narrative, and what better way to do so than by transporting your shareholders into another world? Many companies already video to communicate an aspirational narrative, but the 2D format has its limitations. VR and AR move beyond simply watching to experiencing the story you want to create, making it ideal for communicating emotive subjects like corporate purpose, sustainability and history.
At present, AR and VR use in corporate reporting is limited and experimental. But findings by FRC and PWC suggest that virtual and augmented reality will play a huge role in business, albeit over the longer term. These technologies have the power to create a bridge between the physical and the digital, making them extremely useful in building understanding about a company and its operations.
Augmented and virtual reality work best when it:
- Enhances understanding
- Focuses on a company’s intangible aspects
- Reaches a wider audience than time or distance allows
Although these technologies do have a potential role in the future, VR and AR need to overcome several regulatory, expense and user challenges before they can become a key mechanism for corporate reporting.
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