The metaverse is nearly here. And the fact that it is not just a passing fad is demonstrated by the fact that financial institutions are joining the metaverse.
Known as conservative in adopting new trends and extremely careful with the assets they create or accept, banks and investment funds are now making the first steps into the virtual world. This is, perhaps, the highest form of validation the new digital world can get.
Forecasts for the Development of the Metaverse
During the first quarter of 2022, research company Gartner, Inc. published an interesting report, which predicted that by 2026, 25% of the people in the world will spend at least one hour per day in the metaverse.
What are people likely to do in this virtual space? According to the report, they will use the metaverse for work, entertainment, education, social interactions, and shopping.
Thus, in the opinion of Gartner experts, the metaverse will become a sort of digital replica of our real world. And this is why financial institutions are joining the metaverse.
In terms of numbers, PwC estimates that, by 2030, the global metaverse market could “boost the global economy” by $1.5 trillion. Goldman Sachs is even more optimistic: in their estimation, this value will be $12.5 trillion, with around 35% of the digital economy moving to the metaverse.
First Adopters: Prestigious Financial Institutions Joining the Metaverse
The question is: who is in the metaverse now, and who is merely exploring the option?
The first bank in the US to enter the metaverse and open a virtual lounge was JP Morgan. They joined Decentraland earlier this year and opened the Onyx Lounge.
At the moment, users can browse the lounge and watch experts discussing cryptocurrencies and digital finances. No real financial transactions take place for now, but it is an important first step.
Outside of the US, South Korea’s Kookmin Bank embraced the metaverse even before JP Morgan, back in November 2021, by developing KB Metaverse VR Branch Testbed.
Another financial institution that followed suit in joining the metaverse is HSBC.. This March, HBSC partnered with The Sandbox, becoming “the first global financial services provider to enter The Sandbox.”
“Through our partnership with The Sandbox we are making our foray into the metaverse, allowing us to create innovative brand experiences for new and existing customers,” said Suresh Balaji, HSBC CMO, Asia-Pacific, in the press release announcing the partnership.
The bank will acquire a piece of The Sandbox metaverse, called LAND, and use it for engaging with sports, esports, and gaming fans through educational and accessible experiences.
Why Should Financial Institutions Join the Metaverse Now?
Some people say the metaverse is already here, some believe it’s still in the development stage.
Anyhow, various companies – such as Meta, Decentraland, Sandbox, Victoria VR, Croquet, OVER, Immers Space, among many others – are actively creating it, each company in its own way.
So, why would financial institutions be joining the metaverse right now?
There are several reasons for this:
1. Early Adopters Lead the Race
Competition in the financial services world has reached unprecedented levels. There is the threat posed by fintech, as well as cryptocurrencies.
Being the first arrival on the virgin territory is a major advantage in this race.
2. Branding Opportunities
Financial institutions are joining the metaverse in preparation for upcoming generations of customers. They want to change their rigid corporate image and put on a friendly digital face instead.
3. The New Face of Customer Service
Speaking of the digital face, it will soon replace the bank teller at the desk.
Brick and mortar bank offices and branches are disappearing day by day, being replaced by online services. They represent a more efficient and cost-effective way of serving customers and managing their finances.
4. Financial Institutions Start Embracing Crypto
If you can’t beat them, join them – is a saying that finds its application in the new attitude of financial institutions to cryptocurrencies.
A few years ago, banks put the legitimacy of crypto under doubt at every opportunity. Now, several bans already accept to perform transactions with cryptocurrencies.
Being the virtual money you can spend in the virtual world, crypto goes hand-in-hand with the metaverse, which is where financial institutions should be present, as well.
Will We Soon Do Banking Only in the Metaverse?
While the virtual world is increasingly attractive, especially for the younger generation, the real one is going nowhere.
While financial institutions are joining the metaverse, they are not likely to abandon the physical world. Regulatory and governance rules will be adapted to oversee the virtual worlds, but will also require a presence in the real world, as well.
