What HSBC and JPMorgan’s move into the metaverse tells us

By Danny StefanicCEO and Founder of MootUp

There hasn’t been an industry untouched by metaverse innovation in the past six months. The news agenda was filled with stories of industries and global organizations adopting and testing virtual reality experiences to meet projected metaverse user demand. So when HSBC announced its foray into the virtual world last month with the purchase of virtual real estate, it wasn’t a totally unexpected move on the part of the banking giant.

In a statement, the bank said it hopes to leverage its metaverse to engage with sports, esports and gaming enthusiasts. This announcement was closely followed by a second, in which HSBC publicly launched metaverse investment funding for its high net worth clients in Asia.

HSBC’s investment in the metaverse is just one example of how the financial services industry is expanding into the virtual 3D realm. It also demonstrates that the metaverse is not hype but a trend that big business says will completely revolutionize banking and investing.

As someone who has been creating metaverse products for over two decades, I have witnessed first hand how this technology can and will transform businesses. Importantly, the financial services industry is primed for metaverse innovation. I explain why this is the case below.

What is the Metaverse?

In simple terms, metaverse refers to shared online 3D worlds accessible via computer, smart devices, augmented reality and virtual reality headsets. Interaction and engagement are central to Metaverse principles, ensuring that users can become fully immersed in online environments facilitated by Metaverse technology. Think of it as adding a real-time inhabited third dimension to a static two-dimensional web page.

Despite the most recent developments and hype, the metaverse is by no means a new concept. It’s been around for more than two decades, with innovative companies exploring how the technology can be used to practically implement metaverse experiences. While there have been many discussions about the Metaverse from a consumer and entertainment perspective, the reality is that the true potential of the Metaverse comes from its application within the enterprise.

The Bank in the Metaverse

The transition of financial institutions to the metaverse was only a matter of time given the growth of cryptocurrencies and NFTs. The widespread adoption of these assets – figures now estimate that there are 300 million crypto users worldwide, for example – has enabled organizations to do business and transact securely in the metaverse. The simultaneous growth of crypto-assets and virtual realities has made it easier for users to experience a truly virtual reality that mimics, if not surpasses, physical reality.

HSBC’s move into the metaverse, however, was not the first for the banking industry. In February, JP Morgan became the first bank to enter the metaverse, opening a lounge that would allow businesses and other institutions to join the virtual world.

HSBC and JP Morgan’s investment in virtual reality signals a clear shift for the banking sector, a sector that has traditionally been slow to adopt new technologies.

So what opportunities does the metaverse offer the banking industry?

Gartner figures estimate that 25% of people will spend at least one hour a day in the metaverse by 2026 for shopping, working, studying, socializing and entertainment. Meanwhile, data from JPMorgan shows that $54 billion is spent on virtual goods every year.

From the customer’s perspective, the metaverse could completely change the way we interact with our banks. The closure of physical high street branches could be replaced by virtual branches, and the time traditionally spent visiting banks to open current accounts and apply for mortgages could be completely changed if these actions can be performed in a virtual branch.

Likewise, the adoption of the metaverse by traditional banks will enable financial institutions to engage with a new, tech-savvy generation that is eagerly adopting NFTs and crypto-assets. Providing customers with the ability to lend or insure against digital assets or provide a mortgage or credit agreement for the purchase of virtual real estate could also revolutionize banking in the metaverse.

But the benefits of virtual realities go far beyond simply meeting customer demand. Investing in virtual real estate could have a significant impact on a bank’s bottom line as virtual real estate sales continue to soar.

Likewise, the rise of the metaverse for businesses could completely change the way global banks like HSBC operate internally. Metaverse for business refers to the creation and launch of 3D environments for businesses. This can range from a virtual office space from which employees can work and engage, to places for training and interaction with clients and customers. Digital twin technology, or the creation of digital replicas of existing physical spaces, has immense potential here.

The Metaverse for Business, or Enterprise Metaverse, opens up a whole new way of working for banks and financial institutions – enabling staff members to engage and collaborate in ways never before possible.

HSBC and JPMorgan’s support for the metaverse will likely be the start of a paradigm shift for digital banking, and it won’t be long before other global banks follow in their footsteps by announcing their move to virtual reality. We are witnessing the very beginning of a whole new way of banking.