BLOG
BLOG
We believe in AI and every day we innovate to make it better than yesterday. We believe in helping others to benefit from the wonders of AI and also in extending a hand to guide them to step their journey to adapt with future.
The Metaverse is rapidly entering the different aspects of our lives—from working, playing, shopping, and gaming to social networking and attending concerts online. The metaverse banking sector appears to be the next popular phrase that hopes to revolutionize fintech.
This article looks at metaverse banking, why it is gaining popularity, and the opportunities and possibilities it presents for banking and fintech institutions.
In the simplest terms, metaverse banking refers to different banking services that users can avail of within a metaverse. It may be understood as an umbrella term for finance-related activities that allow users to transact in the Metaverse.
After internet banking, mobile banking, and virtual branches are typically available at malls, it is the next technological revolution the banking sector may be looking at.
Related Article: Neobank Vs Digital Bank: Everything you need to know about the future of banking
The Metaverse is essentially a virtual world where people can work, interact, travel, etc., from the comforts of their homes. Similar to the real world, this virtual world also needs financial services that allow users to transact, own, or digitally lease assets.
It allows banks to enable payments, insurance, and loans within the Metaverse while transforming how people experience banking.
Banks are among the sectors that have the potential to cater to the growing demand for digitally native currencies in the Metaverse. In addition, the Metaverse gives banks a unique opportunity to leverage AR/VR technology. Moreover, it enables us to reinvent their relationships with clients and employees.
The Metaverse allows banks to build personalized relationships and offer customized advice at a time when banking has become a mechanical process, majorly devoid of human emotion.
Some of the aspects that attract banks and fintech to the Metaverse are:
Early-stage Opportunities: Had businesses knew how successful the internet was going to be, they would have adopted it sooner. The same applies to the Metaverse as well. Since the Metaverse is presently in its early stage of development, banks and fintech have the opportunity to become the first movers in the industry.
Branding Prospects: Banks and fintech can use the Metaverse to spread awareness about their brand. The Metaverse is primarily focused on creating an enjoyable experience for users. Visiting a bank isn’t exactly the definition of fun. And since most of the processes can easily be carried out online, there’s no special need for users to visit banks in the Metaverse. However, by entering the Metaverse, banks and fintech institutions stay relevant and exhibit growth potential that fuels the confidence of existing customers and simultaneously attracts a new, tech-savvy audience.
Better Customer Service: Online banking services eliminate the need for physical banks. The Metaverse gives banks a rare opportunity to offer virtual face-to-face human services in a transformational and more personalized way.
Digital Currencies: With the Metaverse, banks and fintech can enter the world of cryptocurrencies, NFTs, and other digital assets easily.
The Metaverse can expose banks to a range of legal and reputational risks. While it is difficult to define the exact nature or extent of these risks, some concerns include the following:
Reach out to us today!
As the Metaverse further blurs the lines between people’s physical and digital lives, the concerns regarding privacy, fairness, bias, etc., will only become more acute. It is imperative for banks thinking of entering the Metaverse to be prepared for the following:
Metaverse displays the potential to improve and optimize the banking experience for customers in many ways. While some of these improvements will greatly impact, some will work behind the scenes to increase the overall customer experience.
The Metaverse can bring people, things, and spaces together in both the virtual and the real worlds. This gives banks a unique opportunity to conjure a sense of community and collaborative engagement among their customers.
Reach out to us today!
Adding a 3D feeling of presence to digital banking experiences can make virtual customer interactions more humane and personal.
For instance, a customer may enjoy a more engaging experience with a realistic avatar of an advisor or service representative than with a chat or video call application screen.
Metaverse will create an online virtual space where customers can carry out transactions, access banking information, and use different banking products from their homes.
This shift can augment the processes that are otherwise considered painfully complex, like opening a bank account or submitting a loan application.
Virtual services in the Metaverse are also more likely to attract the attention of a new generation of users—those who are tech-savvy and mostly experience apathy toward the traditional banking industry.
Banks in the Metaverse can benefit from a host of opportunities.
Building a Competitive Edge: The Metaverse allows traditional banks to compete against challenger banks and improve the loss they’ve faced from lagging behind on innovations. With more people exploring and investing in the Metaverse, banks can develop facilities that users can avail of for transactions in the Metaverse. For example, allowing seamless conversion of fiat currency into cryptocurrency.
Related Article: Metaverse Opportunities for Tech Product Owners
JP Morgan’s Onyx lounge, which allows seamless foreign exchange, cross-border payments, trading, etc., is a good example of this.
Potential of new products: The growth of the Metaverse will also cause adjacent products and technologies, such as crypto, NFTs, and other virtual goods, to grow. Banks can offer services like loans (especially virtual real estate) in the Metaverse, accepting NFTs as collateral. In addition, banks can also enable payments for NFTs by establishing dedicated NFT exchange points in the Metaverse.
Banks in the Metaverse can also extend their role to act as custodians of customers’ assets by securing, insuring, and/or lending against cryptocurrency, NFTs, etc. Launching mutual funds of NFTs is another use case that banks and other financial institutions can explore.
Immersive & Personalised Customer Experience: Banks can offer a largely immersive, 24×7 banking experience with the Metaverse. Banks can provide high-touch services for customers seeking sophisticated products. For instance, delivering personalized financial advice such as financial planning sessions, virtual annual portfolio reviews, and product recommendations like mortgages.
South Korea’s KB Kookmin Bank is doing exactly this. The institution has developed a virtual bank where customers can access personalized finances using VR to interact with its financial advisors.
Training & Education: The Metaverse also serves as a wonderful medium for banks to train and educate their staff. Banks can use their virtual branches to educate people on finance and train employees by creating life-like customers and scenarios. Banks may also be able to help the younger generation understand good saving habits and loan processes. This helps them build loyalty and increase customer retention.
Bank of America is currently training its employees in more than 4000 financial centers nationwide. Global financial services company Fidelity Investments has launched The Fidelity Stack–a metaverse experience that helps customers learn the basics of investments through new technology.
Some first movers in the banking industry are already investing in and exploring the opportunities in the Metaverse. They’re experimenting with a wide range of applications that just go on to advocate the technology’s versatility.
JP Morgan has launched an Onyx lounge in the blockchain-based Decentraland. The virtual bank can facilitate foreign exchange, cross-border payments, trading, safekeeping, and financial asset creation.
Bank of America offers VR training in almost 4300 financial centers nationwide. The training is focused on teaching the bank’s employees how to carry out different tasks and client interactions within a virtual environment.
New York-based Quontic Bank also has a virtual outpost in Decentraland, which allows the institution to connect with customers, educate them about its services, and access those services from the comfort of their homes.
BNB Paribas has launched a VR app allowing retail banking users to access their account activity and transaction records in a virtual environment.
HSBC is another bank investing in a plot of land at The Sandbox, a metaverse gaming platform. It will develop the land into a virtual world that can interact with sports, e-sports, and gaming fans.
The Hong Kong subsidiary of Standard Chartered Bank has partnered with The Sandbox to create a metaverse experience that “actively engages clients, partners, staff, and the tech community to explore co-creation opportunities in this new and exciting space.”
In India, Mumbai-based Fintech Kiya.ai has launched the country’s first banking metaverse, Kiyaverse. By using this platform, banks and non-banking finance companies can use it to enable virtual interactions. Customers must wear a VR headset to enter the banking metaverse. Here relevant avatars of relationship managers and robot advisors can directly engage with the customers through the metaverse space.
The Metaverse is still in its nascent stage of development. As with most transformational technology, it’s hard to identify a single point where the Metaverse started. So it is hard to predict its end or its final form.
Despite that, banks worldwide are paying attention to the latest developments in the Metaverse.
To explore banking opportunities in the Metaverse, banks can start by scanning the market and thoroughly understanding the technology landscape concerning how it is evolving and the partners and opportunities that can be leveraged.
From a skill-focused perspective, banks need to train their staff to work seamlessly in the virtual world. This aspect may have scope for targeted investment in AR, VR, virtual marketplaces, etc.
Once the use case(s) has been defined, banks can explore the following two options:
Banks can partner with existing metaverse platforms, such as The Sandbox, Decentraland, Axie Infinity, etc., to host their virtual branch.
The platform you use for your virtual bank will largely affect the experience your customers can expect from your brand. To create a truly limitless virtual banking experience, factors such as transparency, high managing traffic, decentralization, qualitative immersive experiences, etc., must be carefully considered.
The Sandbox and Decentraland are two platforms that currently host virtual branches of HSBC and JP Morgan, respectively.
Once you’ve settled on a platform of your choice, you need to buy space for your bank’s virtual branch. Then add all the required experience elements into that virtual bank platform. To truly enable your customers to enjoy a 3-D interaction, you must create a digital twin of your bank’s branch. To achieve this, banks may have to invest in hiring skills such as user experience designers, software engineers, cloud architects, etc.
If you’re not keen on navigating the complexities of existing metaverse platforms, you can build your own metaverse platform. The Metaverse Experts at Accubits will create a tailored platform that allows you to efficiently reach large audiences worldwide.
Related Article: How to launch an online store in the metaverse?
Owning your personal metaverse space allows you to customize the features and experiences for your customers. You can experiment with seemingly endless experiences and dictate the terms of service.
If you plan to launch a banking solution in the Metaverse, consult a reliable metaverse solutions development company to do a feasibility analysis for launching metaverse-based banking solutions.
With the Metaverse, the banking sector stands on the threshold of a new decade of digital transformation. So, by reinventing customer relationships through personalized and deeply emotional interactions, banks in the Metaverse can thrive exponentially.
Banking in Metaverse is essentially a step above internet banking. Since it helps users avail of the same banking services in a much more personalized and engaging way. This is a defining moment for banks and fintech institutions. The premises are good for banks interested in providing an immersive experience to their customers. Collaborating with fintech institutions and building a meaningful strategy should be the way ahead.
Reach out to us today!
