Last updated on May 24th, 2023
The internet is undergoing radical change even as you read this. Additionally, it is already altering the financial sector.
The Metaverse’s meteoric rise to prominence is unlike anything we’ve seen before. Even while the concept of extended reality (XR) has been around for a while, the topic’s momentum has recently increased, with some experts now projecting the Metaverse to represent an $8 trillion opportunity.
As a result of the increased demand for online games caused by the epidemic, the sector is projected to earn a whopping $154 billion worldwide that year. Although the rate at which the Metaverse will grow to encompass more than just video games is unknown, we can be sure that this new frontier will arrive soon. Financial institutions are now more susceptible to FOMO (fear of missing out) than ever before.
The more we talk to financial institutions about the Metaverse in the banking sector, the more we become enthusiastic about its possibilities. Despite the complexity of the new business landscape, financial institutions can no longer ignore the opportunities it presents.
There needs to be a happy medium between too-rigid regulations and a healthy dose of curiosity if financial institutions are going to join the metaverse bandwagon. We predict the Metaverse will impact banking in the following ways:
To what extent is Metaverse changing the way banks will operate in the future?
Putting innovation to work for clients, the Metaverse gives a golden chance to reimagine commercial interactions and restore a more personal bond between banks and their clientele. Similarly, it can assist in attracting younger consumers who may have never been to a bank branch before, luring them into a new, exciting digital world.
Due to the Metaverse’s ability to connect users across digital and physical environments, financial institutions can encourage client participation in a shared sense of community. Online banking could benefit from a more human touch by incorporating a third dimension and a sense of presence for customers that connect with the company remotely or online. For instance, a customer’s experience with a service professional or advisor portrayed by a realistic avatar could be more interesting than what they would get from a chat app or video.
Increasing confidence and participation will need more than a bank’s entry into the Metaverse in the banking sector, establishing its terms of participation, and subsequent monetization. Innovative financial institutions will work toward a two-way interaction with their clients, where the latter can provide feedback and gain insight into the brand’s plans. With the customer connection becoming more of a partnership, traditional value transfers between institution and client are ineffective. Banks must rethink their value creation and distribution strategies to win customers’ trust and keep them.
1. Improvements to the customer experience
Banking may have become more rational, but it’s still missing an emotional connection with its customers. The irony is that the Metaverse is just what banks have been looking for to bring humanity back into banking and deepen their relationships with their existing clientele. The Metaverse provides fresh opportunities for communicating with new demographics, especially today’s tech-savvy youth. Banks and other financial organizations must adapt their outreach methods to reach this NFT-literate demographic.
Remembering your parents taking you to the bank to get your passbook stamped is a fond memory. So, what will the equivalent of the Metaverse be for the next-gen? Perhaps in the future, customers can visit virtual branches for high-touch customer service, take a virtual tour of a property with a mortgage broker, meet with an avatar financial planner, participate in an investment seminar, or volunteer for a community project funded by their bank.
For instance, JPMorgan is the most recent financial institution to join the Metaverse with the introduction of its Onyx lounge. In addition, South Korean financial institution Kookmin Bank has begun facilitating individualized financial advice and consultations between customer and employee avatars.
If financial institutions are serious about delving into this space, they need to start training their employees as soon as possible. To let C-suite executives see the possibilities of the Metaverse, they will need to prototype solutions quickly. They will need to show the leaders how the Metaverse fosters community and cooperation by linking individuals, organizations, and resources online and offline. It is only because of humanity that the Metaverse ever exists.
2. New market formation
The crypto community has sparked an explosion of digital assets, which are now being exchanged and evaluated on the open market. That is to say, people are already parting with hard-earned cash in exchange for digital possessions. For instance, singer Daler Mehndi made history by becoming the first Indian person to possess real estate in the Metaverse. He also named the area Balle Balle Land.
Using metaverse technology, financial institutions would be able to digitally simulate consumer interactions, such as providing virtual ATM withdrawals, virtual branch shops, and virtual event sponsorships. If one were to push the boundaries of the conceivable, it would be possible for a person to leave a consultation with their avatar consultant, walk a few feet to an ATM, withdraw money using their PIN, and then walk to the next store to buy a virtual handbag.
Financial institutions can get into the growing metaverse economy by insuring and lending against digital assets like cryptocurrencies, non-fungible tokens (NFTs), and virtual real estate. Financial institutions must determine how they will participate and how best to build their reputation in this new market.
3. The birth of innovative products
Banks are already focusing on customers familiar with NFTs, but in the Metaverse, customers will play a different role in the marketing mix. Marketing in the Metaverse is done in collaboration with clients, not at their expense. As individuals increasingly work together in the Metaverse, there will be a shift in the role of marketing in its consumers’ lives from defining to partnering.
Trust in financial institutions will require creative new approaches. As users carve out virtual real estate across the Metaverse, it will be crucial for banks and other financial institutions to resist the temptation to cash in. They will have to put forth more effort to cultivate friendships and allies. They should broaden their search for ideas beyond their field. For example, Nike recently bought the NFT design studio RTFKT to improve its brand image and foster more genuine connections with its fan base. Banks can accomplish some amazing things in the Metaverse, but they must proceed cautiously because taking the wrong steps might severely harm their consumers’ faith.
4. Allowing you to use your current features in a three-dimensional setting
Fifteen to twenty years passed before online banking became commonplace. Only five or six years were needed to develop the mobile phone. Going from two dimensions to three enables the creation of a more immersive, more comprehensive reality for the user. Financial institutions should think about the technological possibilities of 3D banking.
It is not surprising to see pioneers in this field, given 47% of bankers anticipate that clients will use AR/VR as an alternate channel for transactions by 2030. While Citi has tested holographic workstations for financial trading, BNP Paribas has released a virtual reality app that allows clients to use VR in banking processes, including account opening.
We also foresee enormous potential to improve working conditions. The staff at a bank is crucial in promoting the institution’s image and generating positive customer encounters. For example, Bank of America has deployed virtual reality (VR) training to all its 50,000 employees so that their branch staff can practice reading customers’ emotions and responding appropriately in a safe, controlled setting.
With its ability to open up novel channels of team member participation, AR/VR is also a potent tool in the struggle for talent. During the epidemic, Accenture used 3D technology to bring the company closer together and improve remote workers’ experiences. Do you and your coworkers ever engage in a snowball fight in the digital realm? So far, we have.
Banks that want to be competitive in the Metaverse future must enable 3D customer and employee experiences as soon as possible. The next step is to reimagine how you might connect with customers, provide them advice, and create electronic relationships rather than merely “lifting and moving” old experiences into new AR/VR channels.
5. Closing Statements
Like in the actual world, banks will play a significant role in the Metaverse by providing the essential financial services of the future (such as payments, insurance, loans, and mortgages), expanding their operations, and bringing in more money. There’s a chance they can develop brand-new offerings as a result, too. But experts underline that the Metaverse may help modify and improve something even more crucial for businesses: the customer experience.
The Metaverse has the potential to streamline the process of sharing and using information across different digital environments. It will have far-reaching effects on how banks deal with their customers, the goods and services they produce and distribute, and the internal workings of the institutions themselves. New businesses and social practices will emerge as a result of the Metaverse.
Related Article: A Complete Guide to Metaverse – Digital Transformation in Blockchain
Are You Looking for a Metaverse Development Company for Your Business?
The banking industry is at a turning point. Leaders must take a step back to prepare for the next decade and reevaluate their company, the role the internet will play, the worlds they will create and design, and their digital destiny.
