Can a Metaverse-Proof Banking Sector Eliminate its Existing Clogs?
The banking industry is entering the metaverse with a new scope for the digital economy
In the next 10 years, 78% of customers will expect to use augmented reality (AR), virtual reality (VR), and Metaverse apps to visualize how a product will look, according to Futurum Research. Though it might take years for the Metaverse to become a part of our daily lives, tech giants are already actively working on developing it. There’s no doubt that banking in Metaverse (AR, VR, and mixed reality) will take the customer experience to a brand new level.
The Pool of Digital Money
Experts predict that the metaverse can completely revitalize the working and perception of banking. It is also being predicted that the virtual economy created by the metaverse will boost the digital economy, which already accounts for 20-25 percent of the global economy. Sensing the opportunity, many banks have already begun exploring metaverse and blockchain technology. Acorns, a leading American FinTech company, already provides a debit card with an AR technology implanted in it that can be viewed through a smartphone.
Global banks like BNP Paribas and Citi Bank have also made forays into the virtual world. The former has launched a VR app through which customers can carry out transactions virtually, while the latter is testing holographic workstations for financial trading. South Korea’s Kookmin Bank has also started a virtual branch that offers one-on-one consultations between customer and employee avatars. And the latest to enter the metaverse is banking giant JP Morgan, which launched its virtual lounge, Onyx, on the Decentraland virtual world.
Challenges as First Timers
Metaverse is an amalgamation of various technologies like VR, AR, artificial intelligence, machine learning, and blockchain. They are an integral aspect of the metaverse and make it possible for people to interact in a 3-D virtual space. The problem is that we are at the very early stages of creating AR and VR peripherals for mass usage. These devices need to be affordable, have robust micro-processing capabilities, long battery life, and easy-to-handle dimensions. In short, these devices need to reach the ubiquity level of present-day smartphones, which will be a long and arduous journey. But the promise of these devices is already here, with multiple VR devices already available and doing well in the market.
The Inevitable Changes that Awaits
Metaverse has the potential to make improvements and optimize the banking experience for people in many ways. Some of these improvements will have a monumental impact, while others will work behind the scenes to augment customer experiences. Metaverse will create an online virtual space where customers can transact, access banking information, and avail of various banking products from the comfort of their homes. This would augment otherwise painful processes such as bank account opening and loan applications. Moreover, these virtual services could draw the attention of a new generation of users, one that has been mostly apathetic towards the traditional banking industry. Banks would now be able to organize virtual events and functions in the metaverse that could attract new customers from this demographic.
Impact of the Subsideries
Along with the metaverse, adjacent products and technologies like cryptocurrencies, NFTs, and virtual goods will also rise. The implementation of NFTs and virtual real-estate will be an essential facet of the metaverse. And to purchase and sell these products, banks will need to accept cryptocurrency through on- and off-ramp methods. NFTs are prominently displayed in existing metaverses like Decentraland, and banks can provide loans and accept NFTs as collateral in the virtual space. Banks can also facilitate payments for NFTs by setting up dedicated NFT exchange points in the metaverse. Virtual real estate is another asset banks can latch onto. Already, virtual pieces of land in games like Decentraland and Sandbox are being sold for millions. Banks can provide business loans to customers for purchasing these virtual plots.
As we can see, there will be a myriad of benefits of banking in the metaverse, but the reality is that it is still ways off in the future. However, with proper implementation, the metaverse could be beneficial to both the customers and the banks.