As Metaverse will alter how banks engage, enable and invent, the banking sector is gearing up for jumping on the Metaverse. It is a progression from the era of SMS, mobile, and Web. The banking sector is geared up to incorporate metaverse for rendering a more decentralized brand experience. Furthermore, studies suggest that approximately 67.1% of the top bankers believe that the metaverse is going to make a positive impact. Additionally, approximately 38.31% of the executives believe that the Metaverse will be used as a silver bullet in the banking industry. It is expected that the metaverse will revolutionize and reshape the banking sector. In this blog, we will understand in detail the possibilities which will transform the banking environment. The banking industry has already entered the fourth phase of its evolution where they were exhaustively using cryptocurrencies and NFTs. The fifth stage is the Metaverse stage and the evolution has occurred in the following way: -
|Stages of banking evolution
- Reliance on one on one customer interaction
- Absence of customizations
- Processes executed through the Internet & mobile
- Commencement of digital journey
|- Connectivity with the 3rd party application through APIs Rise of the neo banks
|Digitalized finance banking
|- Advent of Web3
|Metaverse in the banking
- Rise in the virtual banking experience
- New virtual banking experience
In the last few years, the metaverse has garnered enormous traction in the banking industry. Let us now understand what are the metaverse opportunities of the banks- Famous researcher Goldman Sachs found that the metaverse domain is all set to become as big as USD 8 trillion in the coming time. With the amalgamation of the technologies like cryptocurrencies and AR/VR, the banks will be able to reimagine ways how to interact with customers.
Here is a data set stating what customers are not getting from their bank-
Although the Metaverse technology garners humongous potential for the banking industry. Let’s discuss some of the use cases of the metaverse in banking-
1- HSBC- The bank HSBC, which has almost USD 3 trillion in assets, enters into a partnership with Sandbox Metaverse. The bank has planned to buy a plot of land at the Sandbox Metaverse, which it will develop to engage gaming fans and e-sports. In fact, warner music group, Gucci, and snoop dogg are among the global brands working with it.
2- JP Morgan- It has planned to open a lounge in the Blockchain-based world. The name of the bank is Onyx Lounge, where the bank suite obtained Ethereum-based services, and offers businesses an opportunity to enter the metaverse.
3- Standard chartered- The bank has also bought land in the Sandbox, which it has decided to utilize for creating the latest experiences for the clients on the metaverse.
4- Siam commercial bank- The bank has built a headquarters in the sandbox and established 3 zones:
Moreover, let us now understand the benefits of a metaverse in banking:
1- Multi-faceted customer engagement:
The banking in the metaverse renders various institutions, an opportunity to revamp the way to interact with their customers.
- Personalization with the incorporation of the metaverse can drive up to 15.1% revenue growth for financial institutions.
- There are chances of approximately 56.1% of customer retention, eradicating the chances of customers leaving the bank due to less customer satisfaction
2- Elevation of functionalities with the help of metaverse
Approximately 46.9% of bankers believe that relying on AR/VR as an alternative transactions channel by the year 2030.
- The metaverse banking offers the customers’ the ability to view their balance make transfers and pay the bills through AR/VR platform.
- Metaverse can bring an enhanced employee experience with the use of an immersive learning experience with the use of customer scenarios with the workers.
3- Improved customer experience
According to a survey, approximately 52.2% of the respondents want fun in their banking transactions. In fact, many customers desire to make their own avatars with the use of the metaverse. It means fabricating traditional operations is very enjoyable by introducing gaming elements. It has been estimated that around 2.6 billion gamers worldwide and this soft power can be harnessed through the metaverse in the banking sector. Other than this the banks are ready to get ahead of the curve by making developments in the following written ways:
- Digital currency is utilized in the metaverse, where it can steer on new definitions. The users will be able to utilize cryptocurrency with their own tokens.
- Digital banking: Customers will be able to deposit money directly into the bank account with the use of virtual reality.
- Collaborations: In the metaverse, the banks will be in need to collaborate with numerous fintech in order to render the best customer experience. The prominent idea is that the platform can bring together a plethora of banking institutions.
The banking professionals are equipping themselves with the knowledge, functioning, and scope of the Metaverse. Researchers are stating that a market worth USD 800 billion should not go in vain. There are various banking professionals are witnessing potential and gearing up themselves up to enter the metaverse.
Although there are a few challenges that need to be taken care of:
The 4 ways in which banks are experimenting are as follows:
The metaverse premises hold numerous opportunities in the banking sector and enhance the immersive experience for the customers. This latest technology can render captivating and unique spaces for customers. In the Metaverse, digital banking will embark on a whole new journey. All the banks have the opportunity to reconnect with the users in all new ways. It is a way to form and develop meaningful coordination with the customers. The banking system will be able to render services available in the real world these include depositing money, withdrawals from ATMs, and even interaction with executives. This amalgamation can transform money management in the banking system. According to various opinions, the metaverse is the future that banks require, as it is expanding the ways how banks interact with customers. Also, these banking systems incorporate metaverse to give a richer experience through advanced interactivity. Various popular banks from DBS to Koomin, have also entered the metaverse and harnessing various benefits. Hence, investing in this domain is a futuristic and beneficial domain.