What if there was a reality that combined the best of the digital and physical worlds? No longer the realms of obscure science fiction, the metaverse is a virtual world that the biggest and most successful brands are taking very seriously.
Imagine this: a digital world that lets you shop in a virtual mall, buy something using a crypto wallet and then pop into a bank where you could set up a new account or take out a loan. All at a time of your choosing with no queues, no distractions, and no parking troubles.
Welcome to the metaverse.
What sounds like a video game is actually fast becoming a reality, with everyone from big tech to big banking looking to - digitally - set up shop.
Said video games have taken advantage of extended reality for decades, but post-pandemic changes to the way we live and work, as well as technological advances, have pushed the development of the metaverse as a viable real-world platform to the forefront. The result is tens of billions of dollars in new investments and predictions that it will be “the future of the internet” or “the next internet battleground.”
What exactly is the metaverse?
“In the simplest terms, the metaverse is the internet, but in 3D. It’s a form of digital interaction where connected, virtual experiences can either simulate the real world or imagine worlds beyond it.
Many of the metaverse ingredients are with us now – think interacting with lots of people and content made by them, in persistent, immersive worlds across many devices, including virtual reality. The more these components intertwine, the closer we get to a fuller version of the metaverse.”Deloitte
Crucially, the metaverse will be an independent virtual economy, enabled by digital currencies and non-fungible tokens (NFTs). In addition, it won’t be device-dependent or owned by a single vendor.
The convergence of augmented reality (AR), virtual reality (VR), mixed reality (MR), extended reality (XR), Web3, artificial intelligence (AI), 5G, Internet of Things (IOT), cloud, edge computing, blockchain, and other technologies will create an immersive experience that’s never before been a reality.
“It will revolutionize nearly all aspects of life and business in the next decade, allowing collaboration in virtual spaces, augmented physical places, and a blend of both. And it will create new lines of business and transform interactions between customers and companies.”Accenture
Skeptical? Consider this: the next evolution of the internet might seem far-fetched, but so did emails and chatbots in the 80s. Everyone from big tech to big banking is stepping into the metaverse and researchers are confident that consumers will follow, faster than you might expect.
of people will spend at least one hour a day in a metaverse for work, shopping, education, social media, and/or entertainment.
The best of both worlds
The digitization of banking has signaled a huge shift in the delivery of better banking - for consumers and corporates and importantly, the underbanked. It’s functionally the absolutely correct way of operating and yet - there’s the potential for a lost emotional connection among the technical connection. The metaverse seeks to address this by reintroducing a personal element in a digital world.
To millennials and their elders, it may seem like a step backward - but considering most in Generation Z have never set foot in a bank branch, the potential of being able to combine the digital world to which they are native and a human element without the constraints of reality is enormous.
“Little wonder that banks are excited by the metaverse’s possibility to transform everything from the basics to the future of business. We cannot be certain how this new channel will evolve in the years to come, but few are disputing that the change will be rapid and far-reaching. Banks cannot afford to stand by and watch it unfold; they need to start exploring its potential and getting ready to scale rapidly to create great new customer and employee experiences.”Accenture
The opportunity for financial services
Innovators and traditional financial services firms like Fidelity Investments, JPMorgan Chase, BNP Paribas, Citi, and American Express are already experimenting in the metaverse.
JP Morgan became the first bank to establish a presence in the metaverse, predicting a market opportunity of $1 trillion and eyeing virtual real estate. It opened a lounge in Decentraland, a blockchain-based world, in February 2022. A month later HSBC, which is closing bank branches in the physical world, bought a digital plot of land in The Sandbox, a digital gaming platform.
For fintechs and neobanks, the metaverse represents an opportunity to lean into their tech roots and engage with customers digitally in a way that’s easy and seamless.
It also provides the environment in which to expand their products to existing customers (who tend to be more tech-savvy Gen Z or Millennials). Think: crypto services, financing digital storefronts, digital investment advice, and loyalty programs in conjunction with metaverse retailers.
A dream society or a fraudster’s paradise?
The brave new world of the metaverse offers huge potential for businesses and consumers - but also fraudsters. Attacks targeting metaverse pioneers have significantly increased in the first half of 2022
“Wherever money goes, crime follows,” says Dave Pattman, managing director of customer services at Gobeyond Partners, part of the Webhelp Group, which already delivers services in The Sandbox.
The reality of the metaverse is a minefield in terms of identity verification, privacy and data collection - not to mention its current lack of regulation.
In fact, the very regulations that ensure financial services companies are trusted in the real world may be a barrier for them to enter the currently unregulated metaverse, warns Pattman.
Brands entering the metaverse at this early stage face challenges not only with risk and compliance but also with the reality of its current trial status and the uncertainty that brings.
It seems though, that such risks will be an inevitable gamble successful companies need to take, with most experts agreeing that the metaverse is a certainty.
of technology innovators, developers, business and policy leaders, researchers and activists in a Pew Research study said that they expect by 2040 the metaverse WILL be a much-more-refined and truly fully-immersive, well-functioning aspect of daily life for a half billion or more people globally.
With promises of faster processes, an attractive customer experience, and lower operating costs – the metaverse holds enormous potential for banks and businesses in general. And while it’s bound to be a challenging journey, it seems clear that the future of finance will be unlike anything we’ve experienced before.