Traditionally, banks were instrumental in the execution of two main functions: to deposit and withdraw currency notes. ATMs then arrived on the scene, operated with electronic chip cards. Online electronic payments now dominate, doing away with the burden of carrying money physically or frequent visits to ATMs. The banking industry has showcased the tremendous influence of the digitization wave. With the Metaverse bombarding our spaces and its associated hype, it will soon become an integral part of the banking industry.
With Metaverse, the way forward looks promising; as the buzz goes, you can virtually enter a bank branch with customer care executives’ avatars helping you deposit money, enter safety vaults, and send or withdraw cash. You can save money in your accounts in pounds/dollars, tokens like bitcoins, or in the form of a digital currency that your bank issues.
While these may seem like far-fetched dreams, the metaverse presents endless opportunities.
So, what are the business opportunities for the banking industry in the metaverse? What would be the benefits of it? Which banks are already considering or using metaverse to improve their customer experiences?
What is the Metaverse?
Metaverse appears to culminate multiple emerging technologies, it is a new paradigm in the technology space that unites decentralized technologies like DLT, NFT, and Web 3 and immersive technologies like the AR/VR stack to shape a multiverse, offering a robust and secure virtual infrastructure.
While the Web 2.0 technology we have today is centralized, Web 3.0 promises decentralization with clear linkages to developing and reimagining the world wide web & the Metaverse. Web 3.0 and Metaverse use disruptive, futuristic, leading-edge technologies with complex user interfaces that depend on AI. Web 3.0 and Metaverse will complement each other in the near future, as Web 3.0 would be the basis of seamless connectivity for the Metaverse.
Why Metaverse now?
Metaverse promises to make people’s lives easier, merging the physical and virtual worlds and giving people the ease of learning, shopping, and interacting, all from their comfort zones. The next iteration of the internet, Metaverse, became the talk of the world when Facebook announced rebranding its company identity to Meta in 2021. Tech giants like Qualcomm, Nvidia, Google, and Microsoft have invested billions of dollars, with McKinsey predicting that the metaverse economy will potentially reach $5 trillion by 2030. It’s said to disrupt the gaming, entertainment, education, e-commerce, banking, and the insurance industry on a scale unimagined before.
Evolution of the Metaverse in the banking space
The banking sector has leapfrogged and undergone a technological revolution from its initial mode of operation with the help of human capital since the last 20th century. Technology brought massive disruption making the banking system more process-oriented, leading to a large-scale expansion of its services. With the advent of the Metaverse, the banking industry will have greater access to talent and expertise, ensure a stimulating banking experience, reduce technological costs, and help better brand positioning to a broader group of customers.
Let’s look at how the metaverse evolved in the banking industry:
The Bank of America has launched a VR training program for its employees. By the end of the decade, 50% of banks globally will likely use AR/VR to conduct customer transactions and enable employee engagement.
Benefits of adopting the Metaverse in banking