Metaverse is one of the buzzwords nowadays and sometimes you may feel left out in a discussion where this topic comes up if you haven’t heard of it prior. The metaverse is simply a virtual world. Metaverse is a term that goes hand in hand with cryptocurrency, which is simply a virtual currency.
Now you see how closely related these terms are, where do you spend cryptocurrency? You got it! …in a virtual world called the metaverse. I hope this fact reminds you to pay more attention to your crypto portfolio-PFL. Lol.
Nowadays, we have seen how crypto is gradually getting adopted across the world by industries, and the banking industry which is mainly the money-making industry is not left out.
This article will explain the relevance of the Metaverse in banking.
What is the Metaverse?
Basically, the Metaverse can be described as a virtual reality space where you can go to school, work, play games, shop, make payments and so much more. The concepts of the metaverse could be easily confusing especially because it doesn’t exist yet, it is just a predicted future of the internet.
However, it is important to know the basics of the metaverse today and its application to the world around us. It is obvious that the metaverse could very well be the next big thing because so many uses and features of this virtual reality realm are being discovered and explored every day.
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Banking and the Metaverse
This quick expansion of the popularity of the Metaverse is being fueled by a number of variables, such as technological advancements and the emergence of the experience economy. The metaverse presents both obstacles and opportunities for companies operating 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 train.
Just as technology can transform the world and make it easier, this is the same for industries and true for the banking sector as well.
Predictions about Banking and the Metaverse
According to this article published on new(dot)bitcoin(dot)com in 2021, A business strategist in the Bank of America predicted that the metaverse is where “we’re going to start using cryptocurrencies as currencies,” emphasizing that it will be where people finally start using cryptocurrencies widely for transactions.
He also predicted collaborations between traditional payment companies and the metaverse.
Furthermore, the recent research by JPMorgan estimates the market and business prospects for companies in the metaverse at over $1 trillion in yearly revenues.
Do we have banks in the Metaverse? What would banking in the Metaverse feel like?
Interestingly, JPMorgan has opened a lounge in Decentraland, a virtual reality built on blockchain technology, making it the first bank to enter the metaverse. A tiger and an avatar of the bank’s CEO Jamie Dimon welcome visitors here.
Additionally, one can use bitcoin or non-fungible tokens (NFTs) to purchase virtual parcels of land in Onyx Lounge, the bank’s lounge in Decentraland.
Also, 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, users will be able to access banking services in the metaverse.
It consists of virtual banking services and operations like remittances that a bank clerk can control. It will also be possible for both user and employee avatars to consult with one other direction.
Metaverse Use Cases in Banking
In the metaverse, banks will gain access to a variety of new opportunities, such as providing the payment rails that drive transactions in the virtual world and reimagining transactions for a 3D world.
As well as engaging with staff in novel ways, luring in young talent, and developing new, more human ways to connect and engage online. Banking opportunities in the Metaverse include:
#1. Innovative human engagement/interaction
At a time when banking has become commoditized and devoid of emotional resonance, banks may provide guidance and foster connections in the metaverse. In ways that would be impossible in text messages or app notifications, the metaverse may bring humanity back into the dialogue after leaving out this aspect in the case of AI and ML (apps and USSD).
Customers might prefer to engage with an avatar remotely or go to a physical location that provides metaverse experiences rather than simply using the mobile app or USSD for transactions. Customers who prefer to relax, interact and feel would definitely prefer to bank on a 3D virtual reality couch than simply scroll through a boring application or USSD solution.
#2. Development of new products and services
The metaverse is a different world entirely and this only means that there would be a need for the creation of innovative products and services to make the experience even more satisfying.
These products and services would in turn become sources of revenue and growth for banks that are in this space at that time. Relevant niches here include products that solve challenges with digital payments, digital assets, and digital twins.
#3. Reinvention of existing customer and employee experiences
The goal of every brand and business in the real world is to remain relevant and valuable to their customers in this ever-changing world of technology, this is possible by following the trends and creating solutions to problems as soon as they are predicted.
Knowing that metaverse banking may be the future of banking sooner or later, there is a need for traditional banks to re-develop and modify existing processes and innovations to improve user experience and build trust in the virtual world.
#4. An opportunity to explore NFTs
In the metaverse, 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.
This would also mean that they’re catering to their users who already tapped into NFTs.
#5. Upskilling and Training
There’s enough room for everyone in the metaverse, existing bank employees who may be interested in being a part of banking in the metaverse could decide to undergo relevant training in this regard.
As a banker, to remain valuable in the metaverse, you’ll need to be well-versed in a variety of topics, such as computer animation, 3D modeling and backdrops, artwork, lighting, gaming interfaces, and more.
Similarly, banks that decide to explore opportunities in the metaverse would need to employ skilled personnel to ensure a seamless experience for their users.
#6. Doing the same thing in a different way
The catch to this is, that the metaverse is saying while the metaverse is gradually becoming the new big thing, traditional banking companies can continue to serve their users without losing out on opportunities. This makes it impactful as banks have the opportunity to build trust and foster relationships while providing financial solutions to their existing users and acquiring more users.
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Relevant Skills Needed to Bank in the Metaverse
A metaverse bank would need to refine and modify their employee skill set, adopting the metaverse specialists to their existing human resource processes.
- Metaverse engineers/developers
- 3D Animation artists
- Metaverse solution architects
- Illustration artists
- User experience specialists and more
- Application and Game developers
The metaverse is an extremely fascinating technology that is gradually gaining recognition across the world, it is also being adopted in several industries including banking.
We have a couple of metaverse banks already in the works and there would be more with time. Traditional banks who join the bandwagon might just be creating endless opportunities for themselves, their communities, and the world at large.
In addition, banks that key into this technology would have the chance to stand the test of time when it comes to customer satisfaction, relevance, growth, and scaling.