Banks have traditionally known that they have a better chance of keeping long-term customers if they can attract their attention when they are young. Due to this, they have a history of being early adopters of developing technologies, including the metaverse, which is currently a hot topic in technology.
What arose in the metaverse banking industry?
The fourth stage of the banking sector’s transformation has begun as of the time this article was written, with NFTs and cryptocurrencies taking center stage. A few banking organizations have simultaneously moved into the fifth stage, known as the metaverse.
Digitized Banking
With the arrival of Web3, blockchain has given rise to a new secure, open-bordered, and quick banking industry. NFTs and cryptocurrencies, which have added whole new assets to the financial system, such as art, gaming, and real estate, have a significant impact on this.
Metaverse in the Banking industry
Banking is one of the businesses where the metaverse has experienced tremendous growth over the past one to two years. The sector is poised for another major shift as metaverse banking experiences take center stage.
Banks’ metaverse business opportunity
According to the research, the metaverse domain is expected to grow to a size of $8 trillion shortly. Banks play a crucial part in the current market valuation. Banks will be able to reinvent how they interact with their consumers and with which products by using technology like cryptocurrencies and augmented or virtual reality.
Bank Use Case For their Clients
Although technology has enormous promise for the banking industry by providing solutions to the numerous problems clients confront, the banks that have entered the market are still figuring out where they fit.
The creation of “virtual branches” where retail banks can sell banking products to a new generation of digitally native consumers or offer customer care to their current clients is one of the most straightforward uses of the metaverse from the perspective of retail banks.
The two new metaverse platforms draw hundreds of thousands of users each month, while two well-known gaming platforms with metaverse-like features, can draw millions. Their target customers are digital natives who are eager to work with businesses that understand and appreciate virtual worlds and gaming-like settings.
The popular band giant, which bought land in The Sandbox earlier last year and will use it to interact with online sports fans and e-sports enthusiasts, is one of the first to open up a virtual storefront. “We see significant potential to create new experiences through emerging platforms,” they said. “This opens up a world of possibility for our present and future consumers, as well as the communities we serve.” On the Sandbox platform, Commercial Bank also operates a virtual branch.
A major international bank that has already made a name for itself on the Decentraland platform. Inside the platform’s Metajuku virtual mall, it established a lounge space called Onyx where guests can learn more about blockchain and other tech-related projects the bank is involved in.
However, this trend is not as recent as it might appear. Since it has been around since 2003,
Second Life is frequently mentioned as one of the original metaverse environments. Later, in 2007, the bank established a presence on the platform with many elements that newer metaverse bankers are developing, such as the capacity for interaction, communication, and interaction via avatars.
Metaverse’s Privileges in Banking
A variety of advantages exist for traditional banking in the metaverse. benefits that open up new financing methods in addition to having an impact on customer experience.
Enhancement of current 3D functionalities
Many banks have begun educating their staff on VR because 47% of bankers believe that AR/VR will be a viable alternative to current transaction channels by 2030. For its 50,000 employees, for instance, the company has created a VR training program that simulates actual client scenarios.
Enabling 3D customer and employee experiences will provide banks access to more advanced solutions that will allow them to reach out to a new target market and build their dominance. Here are a few advantages of 3D for banks, to sum up.
Provide customers with the opportunity to monitor their balance, pay invoices, and transfer funds using AR/VR platforms. Create a sense of community among remote workers as they are onboarded and provide an immersive learning environment through simulated client scenarios.
Engaging customers in multiple ways
The possibility to reevaluate customer interactions and how to provide sympathetic service through avatars is provided by banking in the metaverse. The two components of the experience-focused response to how the metaverse will impact financial services are as follows:
Personalized connection: In the metaverse, banks can provide high-touch service to their clients by offering them a virtual view of their portfolio and revenue, holding virtual financial planning meetings, and making well-thought-out product recommendations.
Banks can expand their physical experience in the digital realm by simulating actions like cash withdrawals from ATMs, branch placement and design, and more. As a result, clients would feel more connected to the bank.
Create innovative ideas
Numerous chances exist to use cutting-edge banking products in the metaverse, such as
Electronic payments
A Digital twin of digital assets like NFTs and cryptocurrencies. As a result, physical and virtual banks become more interconnected, and banks are given access to new revenue streams.
So those were the three main advantages of the metaverse for banking. But for a bank, entering the area might be extremely difficult. After all, it moves them toward total virtualization, which is vastly uncharted territory. Even though the metaverse has made financing considerably easier, banking institutions must plan their use of metaverse technology and set milestone-based targets.
Mending the gap between real and virtual economies
Banks are already considering the gains that will be earned by moving money and maybe other assets between the virtual and real worlds, with spending in the metaverse predicted to reach $5 trillion by 2030.
Users of metaverse platforms can purchase virtual products to customize their avatars and virtual residences. Online play-to-earn games allow players to earn money. Trading in cryptocurrencies and distinctive digital assets like NFTs is typically included in this. This money is converted into actual currencies and paid into a bank account to be used in the real world.
Regarding Bank and Metaverse
Banking services firms are keen on establishing a reputation as tech-savvy, trailblazing high-tech corporations. Banks must make sure they are viewed as being on the cutting edge given how much our lives are being revolutionized by new technologies like artificial intelligence (AI), automation, virtual reality (VR), and the internet of things (IoT). One of the goals of doing this is to maintain their ability to attract top talent, which might otherwise prefer to seek out technology behemoths for the most exciting and lucrative job possibilities.
Future of banking in Metaverse?
Does this mean that banking in the metaverse is just another passing trend that will disappear as soon as people tire of it? It makes sense that financial organizations could be looking to the metaverse and virtual worlds as a way of retaining connections with consumers and offering basic banking services given that actual physical bank branches are closing at an unprecedented rate.
It is also obvious that the growth of virtual economies and the exchange of virtual products and services are on the horizon. It appears likely that virtual environments will offer a familiar platform for today’s younger generation of consumers to do just that when they get older and desire to bank and interact with financial services in settings they feel comfortable in.
Conclusion
Banking is about to experience a digital change that has never been witnessed before. Metaverse is much more than just a development in technology that will create new revenue streams. It is a platform that banks may make use of to engage with their clients emotionally and personally in a new setting. Metappfactory provides metaverse development services for banking institutions, and we frequently advise our clients to adopt a technology adoption strategy based on milestones for upcoming trends.
