The Future of Banking in Metaverse

The metaverse can influence how banks interact with their customers, invent new products and enable services.

Going to the bank to get your first credit card or savings account was an exciting experience, which most likely started a long-term relationship with your bank. What will be the first memories of the bank for future generations? The empathetic and meaningful interactions we once had are disappearing day by day.
The metaverse can be defined as a collective virtual shared space, created by a physically persistent virtual space and the convergence of a virtually enhanced physical reality. It is a sum of virtual reality (VR), augmented reality (AR) and the Internet. Virtual reality and augmented reality are nothing new for avid gamers, but in other industries, especially banking, it could create a revolution. The potential of the power of virtual reality and augmented reality to create an exceptional user experience is yet to be fully realized.
Besides the enormous potential for product and service innovation, the Metaverse offers a chance to reintroduce dialogues that have been lost in digital channels, in order to create memorable experiences for the next generation of banking customers, many of whom may never need to go to a bank branch. in their lives.
A customer might have a more engaging experience with a service representative or advisor represented by a realistic avatar than with a chat app screen or even a video call. Unique experiences will be the key to attracting future generations to Metaverse banking. Initially, brand owners can establish their own spaces within the Metaverse or turn to Big Tech to create Metaverse-as-a-Service platforms that they can engage with. In the future, these spaces will likely evolve beyond branded or corporate websites that are commonplace today, to more neutral spaces where subtle and sophisticated interactions can take place, and in a fluid and free manner. .

User experience: traditional mode versus metaverse
Bank branches were used for depositing and withdrawing banknotes. Then ATMs came along with the introduction of debit and credit cards, eliminating the need to withdraw and carry cash. Even the need for a physical card has disappeared with the development of electronic payments.
What if the next change in line was for banks to offer you to virtually walk into a digital bank branch, take the help of a customer representative or bank manager, and then allow you to walk into your safe to withdraw or deposit money virtually? What if banks let you hear the sound of money while you’re engaged in the transaction process on this unique user interface? What if you could pay with real money as well as virtual money deposited in your account legally? Imagine being offered the choice between paying with euros from your checking account, a digital currency issued by a central bank, or Ethereum-based coins and tokens through a connected digital wallet like Metamask.
Through Metaverse, banks can lend and insure against virtual currency, non-fungible tokens, and virtual real estate in the booming Metaverse economy. They can also simulate virtual customer interactions such as cash transactions from virtual ATMs. The virtual world, where people can transact and own or rent digital assets, will require financial services, just like the real world. In the metaverse economy, banks have intriguing prospects for facilitating payments, investments, insurance, and lending. But the potential of the Metaverse doesn’t stop there: it also gives banks the chance to bring humanity back into banking. Digital banking is functionally correct but emotionally lacking in today’s digital environment.

Global Survey Forecasts for the Metaverse Economy
According to the Accenture Technology Vision for 2022 survey, 67% of global banking executives believe the metaverse will have a positive impact on their businesses, with 38% believing it will be a game-changing or transformational technology. Approximately 92% of respondents agreed that future digital platforms must provide unified experiences that allow customer data to be shared across platforms and sites.
According to Goldman Sachs and Morgan Stanley, the metaverse economy could be worth up to $8 trillion. Banks are among the entities best positioned to meet the metaverse’s growing need for digitally native currency and identification.

Current scenario and future assessment of the metaverse economy
JP Morgan became the first bank to enter a metaverse earlier this year. He launched his Onyx Lounge in Metajuku, a virtual recreation of Tokyo’s Harajuku shopping district, on Decentraland. Its living room is furnished with a tiger on the loose and a portrait of its CEO Jamie Dimon. Over the past six months, the Metaverse has gained traction in a variety of industries, including banking. While advances in hardware and software allow the metaverse to connect the real and virtual worlds, it also requires an economic system to thrive. NFTs will take center stage here in order to unlock value in the metaverse. The demand for a reliable method to drive value exchange in the Metaverse will grow as the Metaverse becomes the norm for gaming, working, and socializing in the future. Businesses shouldn’t wait any longer because joining Metaverses is now the perfect time. Being part of the Metaverse financial infrastructure is now the equivalent of creating a website or an online store in the early 90s.

What will determine when banks make the switch?
As the main business of banks is about customers and money, and these two are becoming more and more virtual, it is only a matter of time before more and more banks join the virtual world. .
Two major aspects can determine when banks make the switch. The first is the circle of customers. When customers were only present in the physical world, so were banks. Banks are now also online, as customers spend hours a day online. If customers spend hours a day immersed in an alternate universe, banks will follow. They must, after all, they must be where their customers are.
The second circle of influence is monetary. Banks used to sell items based on real-world items, but that changed due to abstract factors like algorithms. Money can now be created in cyberspace using non-fungible cryptocurrencies and tokens. Generations Y and Z grew up in the world of the internet, but Generation Alpha is maturing in the metaverse. Future generations will always be looking for quick and easy ways to make money. This lawsuit could lead them to options that put them at higher risk, with non-fungible tokens being a prime example right now.

Will decentralized finance be a threat to banks?
What if it was quite the opposite, a huge opportunity to leverage the investments that banks are making in cloud and AI infrastructure and increasingly also in distributed ledgers? Do you remember internet banking in the 90s? He did not destroy the banks. He strengthened them while drastically reducing operational costs and providing use cases that would have seemed unthinkable to bank staff in 1992.

How will banking work in Metaverse?
To truly realize the possibilities of the metaverse for banking, one must first understand what a metaverse is and the components that make up this digital copy of our current reality. To this end, the puzzle consists of four unique pieces: technology, platform, market and commerce.
Each is powered by a distinct set of ecosystem participants, each having gone through a distinct maturation process. Two kinds of gadgets will be used to create the Metaverse: holographic and immersive. Holographic devices project digital elements into the real world, making them appear as if they were there. By concealing the physical environment and replacing it with virtual reality, immersive technologies provide an immersive experience.

Conclusion
The metaverse can bring huge improvements to the banking industry, influencing the way banks interact with their customers, invent new products and enable services. Money was once thought of as tangible banknotes exchanged by people to obtain goods and services. The future will depend on the ability of bankers, designers and security analysts to identify the elements and deliver a unique customer experience to future generations while preventing fraud and addressing privacy and data protection concerns. The metaverse will be the playground of future generations. The challenge will be how to leverage its unique features to design a truly immersive user experience for customers visiting the bank digitally.
(Chandni Jain is Art Director and Product Designer and can be reached on Twitter: @ichandnijain and Instagram: @chandnijain.in)