Let’s explore the emerging trend of banks and fin-techs in the meta world!
The metaverse is a digital reality where users participate and co-exist in a virtual society. According to the Bloomberg Intelligence Report, the market size of the metaverse will reach $800 billion by 2024, implying that more and more people will flock to the metaverse, and enterprises will need to be future-ready to capture a piece of the pie.
A bank in a metaverse will allow its customers to move around their own virtual financial town, with a virtual branch and financial playground, as well as a “telecommuting” center for employees. Customers entering the virtual branch will be able to interact with the range of services available and also communicate with real-life agents.
- JP Morgan, the US investment giant, recently opened a lounge in the blockchain-based Decentraland. The bank believes that its Metaverse branch will allow customers to create virtual avatars, establish virtual rooms, and travel in the ‘Onyx Lounge,’ which is named after its suite of Ethereum-based services.
- Kookmin Bank, South Korea’s largest financial institution, has also enabled its customer service options in the metaverse by providing one-on-one consultations between customers.
- HSBC followed the suit by opening a branch in the well-established Sandbox metaverse, and also Soxin, a UK-based payment-fintech company, announced its impending entry into the augmented reality platform.
- Also joining the party, Standard Chartered Bank Hong Kong (SCBHK) has recently become the latest major bank to embrace metaverse technology.
- Similarly, global banking institutions such as BNP Paribas and Citi Bank have also made forays into the virtual realm. The former has released a virtual reality app that allows customers to carry out transactions virtually, while the latter is testing holographic workstations for financial trading.
What attracts Banks to the metaverse?
- Early-stage opportunism: The more we talk about the metaverse, the more we learn about its potential. Most businesses would have adopted the internet sooner if they had known how successful it would be in the late 1990s.
- Branding opportunities: By entering the metaverse, these institutions can stay relevant and stamp their mark on worlds with growth potentials, such as HSBC in Sandbox and JP Morgan in Decentraland, and they will be placed at the heart of areas with a lot of virtual footfall.
- A new dimension to customer servicing: Because online banking services are so good, brick-and-mortar banks are dying out. However, many institutions still want to be able to provide what they consider face-to-face human services, and the metaverse allows them to do so digitally.
- The potential of new products: Along with the metaverse, related products and technologies such as cryptos, NFTs, and virtual goods will grow in popularity. The metaverse may prove to be an important aspect in the proper implementation of these new products alongside their traditional ones.
- Recruiting new customers: The adoption of new products will be more by the younger generation as they tend to try out new things and experiences, and also the emotionally detached experience provided by the traditional banks will eventually lead them to try banking in the metaverse.
Every time a company or brand declares its intention to be a part of this new digital world, the metaverse’s valuation rises slightly. We have seen that brands and companies are flocking to the metaverse due to FOMO (fear of missing out), as it is a lucrative opportunity for banks to miss out on in the future. However, for the time being, their role in the metaverse is one of exploration and learning in order to understand all of the new and as-yet unanticipated opportunities that may be offered in the future.
Writer: CA Suraj Kar
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