There is little doubt that the internet is about to make a significant evolutionary step since huge tech firms like Tencent, Meta, and Microsoft are all placing significant bets on the metaverse.
The internet will transform into a constant 3D environment in this new phase, going from being a disjointed collection of websites and apps to being as easy to access as the nearby theater while going from work to social media. The next generation of digital technologies underpins the user experience of having a sense of presence while inhabiting a digital environment with a data framework that creates veracity, scarcity, and even trust.
Financial services will be required in this virtual environment where individuals may transact and buy, sell, or rent digital assets, just as in the real world. The ability of banks to facilitate payments, investments, insurance, and loans in the metaverse economy is one of these intriguing potentials. The metaverse also gives banks the chance to bring humanity back into banking, so the potential doesn't stop there.
This fast expansion is being fueled by several causes, including technological advancements and the emergence of the experience economy. The metaverse presents both possibilities and problems for organizations in many industries. The metaverse already includes a significant amount of media, entertainment, and gaming. It will soon be time for the banking, retail, and financial services sectors to join the bandwagon.
According to recent research by JPMorgan, there are over $1 trillion in annual income prospects for businesses in the metaverse. By constructing a lounge in the virtual world of Decentraland, which is built on blockchain technology, JPMorgan has incidentally become the first bank to enter the metaverse. A tiger and an image of the bank's CEO Jamie Dimon welcome visitors here. Additionally, one may use bitcoin or non-fungible tokens (NFTs) to purchase virtual parcels of land in Onyx Lounge, the bank's lounge in Decentraland.
In a similar vein, the KB Metaverse VR Branch Testbed is being developed by KB Kookmin Bank, one of South Korea's largest financial organizations. By donning a head-mounted VR device, consumers will be able to access financial services in the metaverse. It consists of virtual banking services and operations like remittances that a bank clerk may control. It will also be possible for consumer and employee avatars to consult with one other direction.
What is the metaverse business opportunity for banks?
The metaverse economy may be valued at up to $8 trillion, according to estimates from Goldman Sachs and Morgan Stanley. The need for digitally native cash and identity in the metaverse is on the rise, and banks are among the businesses most positioned to meet it. However, banks have the chance to leverage AR/VR and other technologies to completely rethink how they interact with customers and staff, in addition to the financial value of the developing metaverse economy.
At a time when banking has become commoditized and emotionally devoid, banks may provide guidance and foster connections in the metaverse. Via ways that would be impossible in text messages or app notifications, the metaverse might bring humanity back into the discussion. By 2030, 47% of bankers predict that clients will use AR and VR as a substitute channels for transactions.
Here are just a few of the myriad possibilities the metaverse might provide the financial sector.
- Building a competitive edge
Even though financial organizations are only beginning to dabble with the metaverse, it might signal a complete shift in the way we do banking. Traditional banks may have a chance to catch up to challenger banks and regain lost ground after falling behind on innovations like embedded finance and WhatsApp payments through the use of the metaverse.
Financial institutions must provide tools for these transactions, such as facilitating the conversion of fiat cash into the cryptocurrency used in the metaverse or extending loans, as more individuals are now visiting the metaverse to spend time and make purchases.
- Explore the NFT opportunity
Many individuals are already investing in NFTs and conducting business in the virtual reality sector. NFTs will allow users to facilitate identities throughout communal and social activities, which might act as a bridge between users and the metaverse. They could also make it easier to determine who owns digital goods that are exclusive to virtual reality.
NFTs may develop into an asset class for banks as part of wealth management. Banks and other financial organizations have the chance to advance the situation by introducing mutual funds for NFTs, where the investment may grow.
- An immersive experience for customer engagement
Banks may now provide an immersive 24-hour banking experience in the metaverse for clients who still want to visit a bank office. Financial organizations can band together on the cloud and share resources, such as contact centers, even if not all banks may be able to completely hop on the metaverse bandwagon. Bank executives' metaverse avatars may soon replace voice-based contact centers for client complaints.
Customers now have access to a 360-degree perspective without having to stand in line at the actual bank or speak to a relationship manager over the phone. Customers will have access to all of the bank's services and personalized interactions with bank employees in the metaverse.
The metaverse is proving to be an excellent training tool as well. The virtual branch of KB Kookmin Bank will be used for employee training as well as financial education for young people. Banks can construct clients and scenarios for training reasons. One intriguing use involves banks using the metaverse to instruct the children of their clients in wise financial practices. Banks may issue digital money in the metaverse, helping kids learn about loans and how to save. Additionally, it will help them keep clients and foster loyalty.
- Prepare for new-age lending
A secure channel is required for metaverse transactions. Financial institutions will gain if they can identify, create, and put into practice solutions that will meet all requirements for cryptocurrency transactions and investments. Government rules and a security system are only two of the numerous variables that may affect this.
Decentralized finance and Web 3.0 will now aid in the decentralization of data. Blockchain will be the fundamental technology, but it will also give people control over their data. Transactions will include fewer intermediaries, and they will also be less expensive.
What are the benefits of banking in the metaverse?
A variety of new opportunities will be available for banks in the metaverse, from providing the payment rails that power transactions in the virtual world to reimagining transactions for a 3D world, to engaging with employees in new ways, luring young talent, and discovering new, more human ways to connect and engage with their customers online.
- Reinvent existing customer and employee experiences
To develop 3D customer and staff experiences, banks will be able to use AR and VR technologies.
Metaverse Banking: Offering consumers the option to check balances, pay bills, transfer money, and do business utilizing AR and VR channels is known as metaverse banking.
Employee Experiences: Delivering immersive learning experiences in the security of simulated client settings or onboarding remote workers in ways that foster enjoyment, connection, and a feeling of community are examples of excellent employee experiences.
- Engage with customers in new ways
Banks may rethink how they interact with clients by providing individualized guidance, providing sympathetic support, and developing trust. Customers might engage with an avatar remotely or go to a physical location that provides metaverse experiences.
Personalized Interaction: Offering high-touch service to clients shopping for upscale goods is an example of personalized engagement. providing individualized financial guidance, including virtual portfolio assessments every year, financial planning meetings, and product suggestions like mortgages.
Marketing & Brand Extension: Virtualizing common brand encounters, such as taking money out of an ATM, branch placement, branding, and endorsements are examples of marketing and brand extension. adding more vivid and emotional detail to the environmental, social, and governance credentials.
- Invent new products and services
Banks have the chance to capitalize on the booming metaverse economy by offering cutting-edge banking goods and services as a source of expansion.
- Secure wallet functionality and payment rails for metaverse goods, services, and economies are made possible by digital payments.
- Digital assets: By protecting, insuring, and lending against cryptocurrencies, NFTs, and virtual properties, banks may expand their position as custodians of clients' assets to the metaverse.
- Create a virtual twin of an asset or piece of property, such as a house or a bank branch, using digital twins. Instead of merely seeing 2D images and video, picture exploring a flawless VR replica of a house you might be interested in purchasing. The digital twin might be used by a bank employee to underwrite the loan.
Which skills will banks need for their metaverse deployments?
Banks will require a new set of talents for a future dominated by metaverses, just as they did when they hired user experience designers, cloud architects, and software engineers to carry out their digital reforms. 3D artists, game designers, platform specialists, and experts in various blockchains are a few examples of these skills. The creation of a talent pipeline must begin immediately.
Banks can get started by determining the markets in which they anticipate competing and the skill gaps that will prohibit them from carrying out their strategy effectively. This should be a sustained effort that includes hiring people from outside the organization to address any shortages and upskilling current workers through vendor-based training to increase their knowledge of and proficiency with the bank's intended usage of metaverse platforms. Platforms with little or no coding can assist launch metaverse efforts.
Conclusion
The next decade of digital transformation in banking may prove to be just as significant as the beginning of the Web and the mobile revolution. Although the metaverse represents a huge technological advance, it is much more than that. Its potential for magic resides in how it will allow banks to reestablish communities and rekindle client engagements. We'll return to the financial future thanks to the metaverse. By providing the degree of individualized care and intense emotional connection that distinguished branch banking in the pre-digital era, banks will be able to flourish in this market.
The metaverse promises to reimagine how data travels and is used throughout digital experiences, as well as to remove the friction now present between the several digital platforms of today. It will fundamentally alter how banks connect with their clients, the goods and services they provide, how they produce and deliver them, and how they run their businesses. The metaverse will develop new businesses, methods of communication, and social interactions during this process. However, banks will want support from an IT company that is familiar with Web3.0's structure and algorithms. So you may get in touch with TransformHub right now to start your Metaverse adventure.
Contact TransformHub to learn more about how we can help your company flourish. Contact us at sales@transformhub.com or +65 31384660 for more information.
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