Banks have long recognized that if they can attract clients’ attention while young, they are more likely to keep them for life. As a result, they are always fast to capitalize on new and developing trends, and today’s hot tech potato – the Metaverse – is no exception.
Generation Z customers are entirely digital natives; online is their default option when shopping for the required products and services. For example, if students need to buy assignment, they may easily do using online writing services. The metaverse – persistent, immersive digital environments that may one day supply everything we need to live our lives digitally under one roof – offers new opportunities for businesses to connect with customers. Banks, as usual, have been eager to capitalize.
What does Metaverse mean for banks?
The banking industry can benefit more from the Metaverse as a touchpoint of a growing digital cosmos. More than a quarter of people are predicted to spend at least an hour every day in the Metaverse for commercial purposes (Cheng and Lu, 2021)
As a result, the requirement for banking or fund transactional convenience is obvious. Regarding comfort, today’s users avoid physical interactions with institutions and get things done quickly without leaving their homes. This requires a remarkable evolution of customized user experiences.
Product and service innovation is the centre point of your customer in this enhanced “phy-gital” era. Knowing that digital banking methods are already in practice, forward-thinking banks will have an easier time responding to the distinctive features of banking in the Metaverse.
The Metaverse can assist banks in improving client connections. It can also be positioned in the growth plan to gain long-term consumer involvement through digital channels with greater interactivity and perfect banking service delivery.
Benefits of Metaverse in the Banking Sector
The banking industry will benefit greatly from Metaverse.
Internet banking via the internet. Smartphones made mobile banking possible. Metaverse will provide a more personalized and engaging experience for virtual banking.
A financial system is essential anywhere there is an exchange of value, including virtual worlds. Online bank transfers, debit card/credit card payments, net banking, digital payments, and payment gateways were used to enable Internet and Smartphone apps.
Metaverse can benefit from the banking industry’s current infrastructure, scalable medium of exchange, and the growing central bank digital currency.
Banks are thus driving and implementing Metaverse-based virtual banking to give a more tailored and immersive experience.
User Experience and Employee Experience
Banks can leverage AR and VR technology to provide their consumers with an immersive 3D experience through transactions via metaverse banking or virtual banking, as well as for employees in delivering immersive learning experiences and onboarding remote employees as a community.
Banks can deliver personalized services virtually without requiring clients to visit the bank’s physical locations and engage them in meaningful new ways. Such interaction can provide customers with individualized experiences while expanding marketing and branding.
Marketing and Branding
Banks that transform to the Metaverse increase their brand value among customers, particularly the young generation who are interested in digital assets, digital currencies, NFT, and so on, by engaging customers in new meaningful ways to allow the expansion of marketing and branding, which helps to attract young talent with technical skills to build solutions around the Metaverse.
Learning and Experimentation
Because the Metaverse is still in its early phases, banks can learn and experiment at a lower cost, allowing them to develop creative metaverse solutions at a lower price.
Early Mover Advantage
Banks that believe in the Metaverse’s potential are establishing a presence on platforms such as The Sandbox or Decentraland, giving them a competitive advantage.
New Products and Services
Many innovative goods and services incorporating digital payments, digital assets, and digital twins have the potential to be developed.
The Metaverse modifies the roles of both the brand and its clients. Banks in the Metaverse will promote their products to clients rather than to them. Customers will behave more like collaborators than partners in the Metaverse.
Banking organizations will have to work harder to earn the trust of their customers. To that end, BFSIs should keep an eye out for innovative products and services that do not immediately relate to their industry. For example, Sumitomo Mitsui Banking Corp. (SMBC) partnered with HashPort and hinted at its entry into the NFT business. SMBC plans to establish a Token Business Lab with HashPort to serve large-scale institutions in terms of NFT and decentralized technology services.
Such a venture will help SMBC attract customers not just to its NFT vertical but also to its banking institutions. It’s a method of connecting disparate client segments to your core as well as subsidized products and services. It will eventually add to the upward trend of your company’s growth.
5 Implications of the Metaverse on Banking
JP Morgan’s predictions for the Metaverse provide important information for the banking industry. According to the BFSI giant, these immersive platforms would enable banking clients to transact, interact, create, own, and experience in novel ways. This implications for banks:
1- The Rise of Web 3.0-Compatible Banking Systems
Financial institutions will require new core banking systems that are Web 3.0 compatible to adapt to the Metaverse. Web 3.0 will be significantly more democratized and decentralized than Web 2.0 (the social internet you use now). This necessitates a significant rebuilding of back-end systems, like the transformation seen in banking during the social media age.
2- Greater support for crypto transactions
The Metaverse is built on blockchain technology, implying that every transaction decision is based on cryptocurrency. As a result, financial institutions such as banks will need to adapt to cryptocurrency transactions and support the various digital wallets that clients may use (helpwithdissertation, 2022).
3- Seamless customer experiences as the default
The previous generation of digital ideas must mature as they accept the next generation. To put it another way, existing systems, including online services such as if students want to get Accounting Assignment Help, they can quickly get from online services and pay payments, Robo-advisors, automated financial guidance, intuitive information search, and so on must mature. In preparation for metaverse adoption, client experience will become more seamless over the next few years.
4- Another platform added to the channel mix.
Customers will expect a bank’s digital presence to extend into the Metaverse as immersive technology becomes more prevalent. A virtual banking branch, like a mobile app, a chatbot service, and an online banking platform, could become a corporate necessity in the following decades.
5- A volatile regulatory environment
The regulatory climate is one major hurdle that analysts expect. Crypto transactions are currently unregulated in most parts of the world, and the Metaverse as a distinct technology category has yet to emerge. Although the SEC has approved a blockchain-based exchange, the regulatory environment will remain volatile in the near future.
Wrapping It Up
The rapidly increasing metaverse economy represents a new opportunity for banks to expand quickly. The hospitality, gaming, and other businesses have already made the transition to the Metaverse. Banks must decide what role they will play and how they will capitalize on this opportunity to build their brand. The Metaverse provides more stability to BFSIs, but if not implemented quickly enough, it can potentially contribute to the banks’ collapse.
Cheng, M. and Lu, W., 2021, December. A Fast Light Baking System for Mobile VR Game Based on Edge Computing Framework. In Proceedings of the 2021 ACM International Conference on Intelligent Computing and its Emerging Applications (pp. 176-181).
HWD, 2022. Crypto Crash: What Investors Need to Know. Online available at https://www.helpwithdissertation.co.uk/blog/crypto-crash-what-investors-need-to-know/ [ Accessed Date: 30-July-2022]