“Metaverse” is the current buzzword. virtual technology sector. Its mission is to transform our lives by creating a decentralized and immersive world. If we continue with our normal daily lives, there is another world in which we will be able to perform the same functions in this digital environment.
The Metaverse is the evolution of Web 2.0, the era of SMS, web and mobile. Bringing a more collaborative and decentralized brand experience to end-users across multiple industries and services. This means that interactions, rewards and spending with one brand or product can be used on other platforms.Analysis by Bloomberg Intelligence says that by 2024, more companies will join this holy war, pushing the market size to $800 billion. The metaverse is already here. It’s not the future. It is here today and continues to evolve.
We are already seeing industries such as gaming, real estate, and retail enter the scene, fueled by advanced technological developments such as blockchain and 5G. Unreal Engine and Unity’s immersive features raise questions about how big tech companies think about capabilities within their organizations to meet customer demands.
Artists such as Justin Bieber performed live in Wave XR’s Metaverse, a virtual music experience. BMW developed his NVIDIA’s Omniverse technology to create a digital replica of the factory floor and reduce production costs. The Metaverse stimulates interest and investment from some of the world’s largest brands.
In the Metaverse, transactions take place between consumers and brands. But how do real-world financial institutions thrive in this highly evolved digital space?
Banking before the metaverse
The traditional banking experience was a nostalgic memory of a physical space that existed two-dimensionally for participants to use and lend services. The transaction process relied heavily on manual labor. Customers had to be present to use the bank’s services.
Next, from the experience of traditional banks, digital banking, transactions have become paperless through digital channels. A customer’s physical presence is no longer required. The digitization of banking services has completely reinvented the customer journey, customer satisfaction goals and the demand for decentralized and regulated data security.
Digital banking works similarly to technology companies as they must incorporate technology to improve their services and build customer relationships. But despite their efforts, digital banking, while convenient for customers, is unpersonalized and unappealing.
Customers have lost their personal connection with traditional banks, which were primarily relationship management
Traditional banks continue to drive transformation programs to deliver digital services to consumers, automate back-office experiences, and meet ongoing regulatory requirements. However, it can be argued that the traditional banking-consumer relationship is not as personalized and engaging as the relationship consumers have with commercial and retail brands.
Customers have lost their personal connection with traditional banks, which were primarily relationship management. The Metaverse’s immersive experience has the potential to enable banks to take advantage of new ways to engage with the next generation of customers, expanding their reach across decentralized platforms and communities.
Migration of functionality and scope in the current operational system and the world of the Metaverse
Rise of new currencies
The advent of blockchain has allowed people to trade, invest and trade currencies like cryptocurrencies. Additionally, it will allow the creation and trading of Non-Fungible Assets (NFTs). A system of decentralized networks eliminates intermediaries such as banks and gives customers direct access to their financial assets.
A decentralized network means less need for traditional banks. However, banks are stepping into the metaverse to streamline banking operations and replace traditional financial instruments with standardized digital assets. Banks must decide what role they will play in using this opportunity to grow their brands.
Young Gen Z and millennials are making extensive use of these new currencies. It is interesting to observe how banks are responding to consumer groups savvy with the latest technological innovations and financial trends.
Bank Opportunities in the Metaverse
In the initiation phase, banks need to identify potential customers who already exist in the metaverse. Understanding their needs and providing financial services accordingly can take considerable time. With demand to buy virtual assets, it’s no surprise that Metaverse real estate is booming. The obvious advantage lies in providing loans to people looking to invest in real estate and leveraging mortgage services.
Young customers interested in arts, games, and entertainment are enthusiastic about using the Metaverse Marketplace. They range from providing services such as financial planning services, loans, and creating savings accounts. Banks are taking advantage of their customers using her AR/VR devices to check account balances, make payments, transfer money, and transact. Banks have the opportunity to reconnect with their customers and build meaningful relationships throughout their journey.
Banks in the Metaverse will be able to offer real-world services such as ATM withdrawals, money deposits, and interaction with agents for assistance and advice. Customers can view and interact with their accounts in 3D as if they were compact reports.
Preparing the metaverse
Finally, banking professionals should be armed with the capabilities, knowledge and scope of the Metaverse. A market worth $800 billion cannot be overlooked. Therefore, banking professionals should be metaverse educated. Banking executives around the world should be aware of this potential and prepare to enter the metaverse market. While other industries like gaming are well advanced, we’re already witnessing a few footprints within the industry breaking into this space.
JPMorgan Chase and KB Bank Enter Metaverse
JP Morgan, the largest US-based bank, has entered the Metaverse, Decentraland, is a marketplace for digital assets called Onyx Lounge. It is located in Metajuku, a virtual version of the Harajuku shopping district in Tokyo. The company also research paper We discuss the opportunities they are exploring in the Metaverse, including operating like a bank in the virtual world as much as they do in the real world. Similar to its role as a bank, it can facilitate cross-border payments, foreign exchange, and the creation, trading, and storage of financial assets.
KB Bank South Korea’s also introduced a VR version of its branches into the metaverse, where employees are represented through avatars. Employees and consumers can speak directly to each other.
the challenge continues
The Metaverse calls for banks and financial institutions to adapt quickly, but immersive virtual spaces present many challenges that need to be addressed. The core driving force behind decentralized autonomous organizations is Web 3.0, so transactions are done through digital currencies. Transactions, interactions, and experiences in the metaverse must be monitored and managed to build trust.
Some of the main challenges here are:
Governance and security
In the traditional sense, an attacker could impersonate another person and misuse a customer’s credit card or other physical assets. Can existing regulations and security controls keep all Metaverse participants safe?
Similarly, in the metaverse, attackers can create look-alike identities from stolen avatars, or hack other people’s avatars to steal their digital assets. Therefore, one of the key challenges in the metaverse is managing identity theft and authentication of those identities.
It is widely believed that the Metaverse relies on blockchain (Web 3.0) technology to enable decentralized commerce. Recently, there have been several high-profile failures of blockchain-based organizations (such as FTX and ASX). This could slow adoption and tighten regulation before the technology can be trusted to be adopted at scale in financial services.
Consumers will need additional hardware devices in their homes to enter the immersive metaverse experience. Currently, these are relatively expensive and only a few are worth investing in, such as Facebook’s Oculus and Sony’s upcoming PSVR, but there are rumors that Google and Apple are making big moves in this space. This immersive experience may also cause nausea in some people and discourage them from using the Metaverse.
Many people do not want to switch from traditional access methods such as mobile apps and the Internet. This means that metaverse technology is unlikely to replace internet access for traditional mobile apps and business services. As such, creating and maintaining a metaverse presence adds additional costs that require a return on investment (ROI) required to survive.
The world is witnessing a growing metaverse where people and businesses are increasingly looking to collaborate. The introduction of innovative technologies and the emergence of new currencies will be prominent elements of the Metaverse financial markets.
Here, the opportunity for banks is to restore mercy to them by creating a sense of trust. A new tech-savvy generation will become the primary users of banking services. Banks must begin to establish themselves as financial expertise, counselors, and experts in customer communication.
The introduction of innovative technologies and the emergence of new currencies will be prominent elements of the Metaverse financial markets.
so synecron, we have been market leaders in some of the major metaverse technologies such as cloud and blockchain since their inception. These are now common, everyday technologies in many of our programs. Our role is to consult and engage brands on their journey to the metaverse to find the sweet spot where investments in the space are more than just public relations initiatives, instead creating new revenue streams through immersive products and services. am.
Peter McConville is Synechron’s Global Head of Digital.