Metaverse and the future of banking
When the term "metaverse" was first used around 30 years ago by Neal Stephenson, an American speculative fiction writer, in his science-fiction novel, Snow Crash, he could barely have anticipated that the term would be on everyone's lips in 2022.
According to an NPR analysis, the metaverse put life into internet or at least rendered internet into 3D.
The metaverse can be described as a virtual environment you can go inside of, instead of just looking at it on a screen. Basically, it's a world of infinite and interlinked virtual communities where people can meet, work and play, using virtual reality headsets, augmented reality glasses, smartphone apps, or other devices.
This may sound like something that is still very future-looking, but in an increasingly virtual world, financial institutions should start to think about their place in it — and some already are.
Gartner anticipates that 25 per cent of people will spend at least seven hours per week in the metaverse by 2026 for professional, personal and entertainment purposes.
Goldman Sachs estimates the metaverse will be an $8 trillion industry on the revenue and monetisation side soon.
People will need financial services to transact and own or lease digital assets in the virtual world. There are huge opportunities for financial institutions to facilitate transactions, loans, investments, and insurance in the new metaverse economy.
Furthermore, the potentiality of the metaverse also includes enabling banks to put humanity back into banking.
Digital banking is often considered as emotionally isolated although it is functionally interdependent and inclusive. However, the metaverse can bring about a human touch to digital banking by personalising customer interaction using top-notch technologies.
JP Morgan has purchased a commercial space in the virtual mall "Metajuku" on "Decentraland".
Standard Chartered also revealed that a piece of land was acquired by them on Decentraland. HSBC acquired a plot of land and SCB Thailand has opened a virtual lounge on The Sandbox.
The Union Bank of India has declared the launch of Uni-verse, the metaverse virtual lounge.
Some banks consider the metaverse technology significantly promising and have already made investments to "occupy the field" and ensure competitive advantage in the future.
The metaverse will create new prospects in digital product development for banks and financial institutions. Metaverse-associated products such as non-fungible tokens (NFTs), cryptocurrencies, and virtual goods are obtaining worldwide acknowledgement. The growth of the metaverse will be significantly dependent on the implementation of virtual real estate and NFTs.
Banks are investing in the metaverse to uplift their brand equity.
The metaverse is deeply connected to the younger generation and could help banks attract new customers.
The success of building and scaling in the metaverse is dependent on having a robust and flexible financial ecosystem that will let users impeccably connect between the physical and virtual worlds.
The metaverse journey will be challenging and there are new lessons to be learned as well as time-tested skills that need to be translated into a new environment. But harmony will sooner or later appear, and there is an enormous reward waiting for the winner at the end of the metaverse.
The author is managing director of eGeneration and partner of Pegasus Tech Ventures.