It’s becoming increasingly difficult to find a high-profile bank that isn’t getting involved with the metaverse. From JPMorgan being the first bank to enter the metaverse and South Korea’s KB Kookmin Bank developing the KB Metaverse VR Branch Testbed to US digital bank Quontic opening a metaverse branch; there is seemingly no stopping the move to the metaverse.
But what’s driving this surge in interest from financial institutions in the metaverse and what financial services are they hoping to offer clients in this emerging digital space? At the moment, no single metaverse space exists where all the new digital bank branches and store fronts can be found, with many digital worlds currently competing for visitors.
Creating a digital experience for banking customers that rivals that of visiting a branch in-person has been hard to achieve, with the advent of the metaverse enabling a truly immersive experience for clients. In the future, instead of ringing-up a call centre, customers could communicate with their bank in the metaverse via an avatar.
Not only does this innovation give clients the ability to manage their accounts from any physical location but the Augmented Reality (AR) and Virtual Reality (VR) technologies provide financial advisors the ability to better engage with customers through data visualisation.
With JPMorgan estimating that the total market for firms in the metaverse will reach over $1 trillion in yearly revenues, banks that are early adopters of metaverse based technologies stand to gain massively.
The opportunities for financial institutions in the metaverse go beyond simply offering conventional services in this new digital space. Countless new businesses and markets are being created through the trade of intangible products like non-fungible tokens (NFTs) in the metaverse.
Virtual commodities in the art and fashion sectors have also seen strong investment, with the transactions underlying these purchases potentially benefiting from the involvement of players in the financial industry.
Innovative use cases
Investment bank JPMorgan has been at the forefront of innovation in the metaverse space since it opened the first virtual bank ‘lounge’ earlier this year. Called the ‘Onyx Lounge’, this space may not currently allow for banking services to be conducted but the bank see the virtual metaverse real estate market to be a strong area for future growth.
From lending to insurance and savings to crypto services, the opportunities for financial service firms are vast in the metaverse. Some banks are also trialling the use of VR devices to have one-to-one consultations with customers and staff in the metaverse.
Banks can use their virtual branches to better engage young people, build customer loyalty and retain clients by offering virtual currencies to educate children about good financial practices.
The metaverse is still developing, with factors like government regulation and technological adoption playing a central role in dictating the growth of these digital spaces. As digital economies continue to expand, banks that are prepared to embrace innovation can position themselves as the go-to financial institution for firms in these virtual worlds.
At FTT DeFi, we will dive deeper into the metaverse and what opportunities there are for financial institutions in these new locations. Register for FTT DeFi on 12th July to hear from industry experts leading the way into the metaverse and beyond.