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Banking on/in the Metaverse

The Metaverse will impact all facets of our lives, not least our work and social lives. But it will also have a significant impact across all industries, from the extraction and production of raw material, to manufacturing, construction and service industries.

Over the past six months, the Metaverse has gained traction across a variety of industries, including the fashion, music and sport industries, and banking. The financial industry has, historically, been quick to adopt new technologies and the Metaverse appears to be no exception.

Back in February of this year US-based banking giant J.P. Morgan created a virtual lounge in popular blockchain-based 3D virtual world Decentraland, which styles itself as “the first-ever virtual world owned by its users.” This was followed by UK bank HSBC in March, who entered virtual world by buying a plot of land in The Sandbox, a “virtual Metaverse where players can play, build, own, and monetize their virtual experiences”, and subsidiary of Animoca Brands, a Hong Kong gaming company. Alongside J.P. Morgan and HSBC British multinational banking and financial services company Standard Chartered has acquired a parcel of land on Decentraland, Spanish bank Caixa has a Decentraland-based virtual café, and Thailand’s Siam Commercial Bank has created a virtual headquarters in The Sandbox. In the headquarters, users will be able to “explore three well-designed environments, join product demonstrations, share a working space and engage with participants around the globe”.

J.P. Morgan’s virtual “Onyx Lounge”, which features a roaming tiger and a floating portrait of the company’s CEO Jamie Dimon, is located in the Metajuku mall, a 16,000 sq ft shopping district inspired by Harajuku, a district in Tokyo known as the center of Japanese street fashion. The Onyx Lounge will enable the JPMorgan to operate in the virtual world in the same way that it operates in the real world. HSBC intend to develop their plot in order to engage and connect with sports, esports, and gaming enthusiasts and “co-create experiences that are educational, inclusive, and accessible.” Asia-Pacific Chief Marketing Officer Suresh Balaji has said that HSBC “… see great potential to create new experiences through emerging platforms, opening up a world of opportunity for our current and future customers and for the communities we serve.” HSBC is already sponsors physical sports, including the World Golf Championships and the World Rugby Sevens Series through advertising and this move sets HSBC up for future advertising in the Metaverse.

But aside from tigers, cafés and advertising opportunities, what might banking in the Metaverse look like? When it comes to discussing money matters, it’s always a more comfortable experience when dealing with people face-to-face, rather than via Telephone banking, or Telebanking. The Metaverse will enable the realistic interactions that provide greater peace of mind to customers without the need to visit a real-world location. So, beside setting up virtual shops to provide banking services to new Metaverse customers, including creators, gamers and artists, what Metabanking services will financial institutions be able to offer that enhance the customer banking experience?

By engaging customers in existing Metaverse platforms like The Sandbox and Decentraland Banks can identify potential customers, provide virtual banking services and create new banking experiences. In the medium to long-term these investments will help banks to consider developing their own virtual world platforms (a private metaverse), enabling new products and marketplaces and tying them back to traditional infrastructure.

There is an immediate market for facilitating payments in the Metaverse and, as more and more people enter the Metaverse, there may be a shift toward more well-established and familiar banking brands. Back in March American Express filed a trademark to allow people to use its payments cards in virtual worlds. Alongside its intentions to provide card payment, ATM, banking and fraud detection services, American Express is looking at Metaverse-centric travel, transport, and travel agency services, including bookings and tours, entertainment and concierge services, including catering to personal and customer-specific needs, and cryptocurrency services, such as crypto management and trading services, and crypto payments processing.

Vertically integrated metaverse technology company TerraZero Technologies is already offering Metaverse Mortgages, allowing people to spread the cost of virtual real estate ownership. But what if the more established financial institutions offered this, in conjunction with digital mortgage processes and mortgages on physical properties, allowing customers to leverage the value of their virtual assets to offset the cost of real-word investments, or vice versa? And what if they provided digital-physical asset exchange platforms, with physical and cryptocurrency accounts under one roof, again allowing customers to maximize the value of their investments?

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Miquel Parera/Unsplash

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