What is the role of Metaverse in banking and financial affairs and investing in Metaverse? Banks moving into the Metaverse are few and far between now! For most of them, Metaverse in banking and finance means buying land in the best metaverse projects and opening a performance space there. Banks are becoming apps where all actions can be done online, and some banks will also have physical branches. Metaverse can play a significant role in the evolution of banking and the financial industry.
Banks that moved into the Metaverse
The role of Metaverse in banking and finance is still uncertain, and because of this, few banks have moved towards it. In the following, we will give some examples.
J.P. Morgan has purchased a designated space in the Metajuku virtual mall in Decentraland. Of course, this experience provided by J.P. Morgan in Metaverse is considered very weak.
HSBC bought a plot of land in Sandbox in March 2022.
The Spanish bank Caixa has a virtual land in Decentraland, launched by the Imagin subsidiary responsible for digital innovation. This project is named “ImaginLAND”.
Siam Commercial Bank (SCB)
In Thailand, SCB has a virtual trade show at Sandbox. The bank’s vision for using the Metaverse was discussed at an event called “Metaverse Open House”. Currently, the banks present in Metaverse only have representative spaces but do not offer interaction with virtual visitors.
What is the role of Metaverse in banking and finance?
Why should a bank enter Metaverse? There are three explanations for this question:
1. Possession of land
Some banks believe in the potential of Metaverse. Therefore, their investments are made with the sole purpose of “reserving land” and preventing competitors from entering. Remember that the supply of land in Sandbox or Decentraland is limited. As in real life, banks hope that acquiring potentially strategic locations will give them a competitive advantage in the future.
Beyond the strategy of occupying virtual land, banks are at the beginning of their learning curve. Their presence in the Metaverse momentarily helps them experiment with new ways to deliver value to their customers.
They undoubtedly believe that testing costs are still low compared to what they could become in the future. The Metaverse is still in its infancy, and achieving specific goals will be easy.
3. Brand Promotion
Finally, banking investments in the Metaverse also serve visual purposes. Metaverse, beyond showing your customers that you are modern, also allows you to position yourself well. It’s a safe bet that banks try to curry favor with developers, data scientists and other IT profiles who are always looking for a company to help them boost their resumes.
What is the vision for banking in Metaverse?
What will be sure is that the extraction of value in the Metaverse will necessarily be done through a dedicated banking infrastructure. Taking their first steps into the Metaverse, several banks we mentioned aim to pioneer decentralized finance (DeFi). They hope their expertise will allow them to find growth drivers.
Financial affairs and customer attraction
The emergence of a new digital age is underway. The development of new technologies, which we are witnessing, is leading us to a global digital revolution, which is part of a technological revolution that many observers describe as Web 3.0. Some agree that this universe will disrupt the functioning of tomorrow’s society, and all sectors of activity are involved, and many players have already bet on the Metaverse.
With this new technology, the traditional banking model is in danger of becoming obsolete. The onus is on banking institutions to pioneer and adapt to this emerging economy to overcome this. We are now at the beginning of blockchain and metaverse technology, but we can imagine many opportunities for players in the banking system.
Support and setup
Banks now have the power to be pioneers in this field. According to Gartner (a famous American consulting company), 1 in 4 people will spend at least 1 hour a day in the Metaverse by 2026. Banks should therefore embrace the emerging public interest opportunities in these virtual worlds.
Interest in entering the virtual world through agencies is limited because the Metaverse is still in its early stages of development. Therefore, it is preferable for banks to initially provide financial assistance to their customers through loans to encourage them to invest in the Metaverse. With the dramatic evolution of land prices on major trading platforms (+700% in 2021, according to Forbes), we are witnessing unprecedented enthusiasm for virtual assets. Therefore, the demand for this type of financing is sure to be very strong.
To take advantage of the opportunities Metaverse offers, traditional or new banks cannot ignore the improvement of their teams’ technical and functional skills. Banks must gradually reinvent themselves as primarily technology companies, as it was decisive in the evolution of digital marketing. Beyond commercial ambitions, they must be convinced of the Metaverse’s ability to bring people together, foster shared interaction, and create a sense of belonging. To thrive, the bank needs to become a key player in these virtual worlds and emerge as a trusted partner like in the real world.