When the term “metaverse” was first used by Neal Stephenson, an American speculation author, in his science fiction novel “Snow Crash” around 30 years ago, he had little idea that the term would be on everyone’s lips by 2022.
According to an NPR analysis, the metaverse brought the internet to life, or at least rendered the internet in 3D.
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The Metaverse can be described as a virtual environment that you can walk into, rather than just looking at it on a screen. At its core, it’s a world of infinite and interconnected virtual communities where people can meet, work, and play using virtual reality headsets, augmented reality glasses, smartphone apps, or other devices.
This may sound very forward-looking, but in an increasingly virtual world, financial institutions should start thinking about their place in it – and some are already doing so.
Gartner predicts that by 2026, 25 percent of people will spend at least seven hours a week in the metaverse for work, personal, and entertainment purposes.
Goldman Sachs estimates that the metaverse will soon be an $8 trillion industry on the revenue and monetization side.
People will need financial services to transact and own or lease digital assets in the virtual world. There is tremendous opportunity for financial institutions to facilitate transactions, credit, investment, and insurance in the new Metaverse economy.
In addition, the potential of the metaverse also includes empowering banks to bring humanity back to banking.
Digital banking is often viewed as emotionally isolated, despite being functionally interdependent and inclusive. However, the Metaverse can bring a human touch to digital banking by personalizing customer interactions using best-in-class technologies.
JP Morgan has acquired commercial space in the Metajuku virtual mall on Decentraland.
Standard Chartered also revealed they had acquired a piece of land on Decentraland. HSBC has acquired land and SCB Thailand has opened a virtual lounge on The Sandbox.
The Union Bank of India has announced the launch of Universe, the Metaverse’s virtual lounge.
Some banks see great promise in Metaverse technology and have already made investments to “take the field” and secure future competitive advantages.
The Metaverse will open up new perspectives in digital product development for banks and financial institutions. Metaverse-associated products such as non-fungible tokens (NFTs), cryptocurrencies, and virtual goods are gaining global recognition. The growth of the metaverse will largely depend on the implementation of virtual real estate and NFTs.
Banks invest in the Metaverse to increase their brand equity.
The Metaverse is deeply connected to the younger generation and could help banks attract new customers.
The success of building and scaling the Metaverse depends on a robust and flexible financial ecosystem that allows users to seamlessly connect the physical and virtual worlds.
The Metaverse journey will be challenging and there will be new lessons to be learned as well as proven skills to be translated into a new environment. But sooner or later harmony will set in, and at the end of the metaverse a tremendous reward awaits the winner.
The author is a managing director of eGeneration and a partner in Pegasus Tech Ventures.