How The Metaverse Will Improve The Banking System
Users can interact with computer-generated environments and other users in the metaverse, which is a network of 3D virtual worlds or a virtual reality place. Every day, new features and applications for this virtual reality realm are discovered and tested, indicating that metaverse has a lot of potential as the next big thing.
With the current surge of interest in extended reality (XR), some analysts are now forecasting the metaverse to be an $8 trillion business opportunity.
More and more people are resorting to online gaming during the pandemic, which will generate $154 billion in income worldwide by 2021 as a result of this upsurge. We don’t know how quickly the metaverse will expand beyond gaming, but we do know that this new frontier will arrive quickly. FOMO (fear of missing out) is at an all-time high for banks.
This rapid expansion is being fueled by a variety of factors, including technological advancements and the advent of the “experience economy.” The metaverse presents several difficulties and opportunities for organizations across a wide range of industries.
The metaverse already includes a significant amount of gaming, media, and other forms of entertainment. A few years down the road, banking, commerce, and financial services will join the movement.
Companies in the metaverse stand to make over $1 trillion a year, according to a recent JPMorgan analysis. Decentraland is a virtual environment based on blockchain technology and JPMorgan is the first bank to enter the metaverse.
Also, South Korea’s Kookmin Bank (KB), is already working on having a metaverse that would avail the metaverse users to operate in banking activities in the future, with a virtual reality headset. A bank clerk can oversee transactions which include some virtual banking services and remittances. Moreover, it would be a platform to establish a direct conversation between consumer and employee avatars.
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Benefits Of The Metaverse To The Banking Industry
1. Explore The NFT Opportunity
Virtual reality transactions and investments in NFTs are already taking place. In the context of social and group interactions, NFTs have the potential to function as a link between the user and the metaverse. They may also be able to identify the ownership of virtual reality products.
NFTs have the potential to be a new asset class for banks to manage as part of their wealth management services. NFT mutual funds could be launched by banks and financial institutions, and the investment could rise in value.
2. Training And Education
The metaverse is also an excellent training ground. With the virtual branch of KB Kookmin Bank, the bank wants to teach young people about finance and train its staff. Financial institutions can generate fictitious customers and scenarios for training reasons.
For instance, banks may use the metaverse to pass on sound investment advice to the children of their customers. Banks can develop virtual currency in the metaverse so that children can learn about saving, lending, and other financial concepts. Aside from retaining clients, this will also help them establish customer loyalty.
3. Building A Competitive Edge
It is possible that the metaverse, which is only now being explored by a few banks, will completely alter the way we bank. The metaverse may provide incumbent banks with an opportunity to compete with challenger banks and recoup lost territory in the area of WhatsApp payments and embedded finance.
Different facilities must be made available by financial institutions to aid this transaction. This may include enabling fiat currency conversion into the metaverse cryptocurrency or loan extension. This is owed to the fact that the metaverse is stirring a major buzz, hence influencing buying decisions.
4. Prepare For An Innovative Lending
Transactions in the metaverse are a function of a secured channel of operation. However, financial institutions have a slew of benefits to enjoy if they can predefine, create, and implement solutions that would serve every crypto investment need and crypto transaction. Factors like a secure system and government regulations will largely depend on them.
At this stage, decentralized finance (DeFi) and Web 3.0 will help the decentralization of data. Using the blockchain would enable individuals to have data rights, while a few third parties will be involved in the transactional process, as the cost of transactions decreases.
Also, this stage is characterized by partnering peer-to-peer lending, and direct purchase and sale between two parties, using cryptocurrency and blockchain.
With the ongoing developments in software and hardware that will further improve the immersive experience no doubt that metaverse is only going to attract more people. Financial institutions need to get their ecosystem in place to provide services on this platform. On the heels of the current transactional activities in the metaverse, there is a need for financial institutions to keep up with the pace.
5. Immersive Customer Experience
Banks can now provide a 24-hour metaverse banking experience for customers who still prefer to visit a physical location. In the cloud, financial institutions can pool their resources, such as call centers, even if they cannot participate in the metaverse to the fullest extent possible. Customers may soon be able to resolve their issues with the help of avatars of bank employees in the virtual world.
Customers may now get a complete picture of their accounts without having to wait in line at a branch or make phone contact with a relationship manager. Customers in the metaverse will be able to communicate with bank staff and access all of the bank’s services through personalized chats.
6. Enabling Banking Functionality In 3D
To reach banking, the internet has to be disseminated for at least 15 to 20 years. It took between five and six years to develop the mobile phone. In 3D, we can create a vast cosmos in which clients may fully immerse themselves. In a 3D environment, banks need to think about how they will be able to facilitate banking.
According to 47% of bankers, virtual and augmented reality will be an alternate route for transactions by 2030, therefore early industry explorers are no surprise. A virtual reality software for banking transactions has been launched by BNP Paribas, while holographic workstations for financial trading have been tried by Citi.
There are also countless opportunities to improve the overall employment experience. It is vital for a bank’s brand and customer interactions to be amplified by employees. Branch staff needs to learn how to recognize and respond to customers’ emotions and behaviors in a safe environment, like Bank of America’s use of virtual reality training for 50,000 employees.
New ways to engage, recruit and retain employees can be found in AR/VR technology. Our team at Accenture used 3D technology to connect and enhance our work-from-home experiences throughout the pandemics.
Banks must explore the possibilities that will revolutionize everything from the basics to the future of the company, no matter how mind-boggling this new environment may seem.
A careful balance must be struck between those who prescribe and those who inquire about the metaverse now that banks have joined the bandwagon.