When was the last time you felt excited to visit your local bank? Our guess is it would have been a long time ago or maybe never. If long queues, unending application forms, and delayed customer support remind you of your local bank, then you are part of the majority who feel the same.
What if we told you that you could speak to an investment banker about managing your funds, get personalised products from your local bank and meet a banker from your home by wearing a pair of Virtual Reality glasses? Interesting isn’t it? This is how the Metaverse integrates with Banking and makes Virtual Banking a reality.
In this article, we will take you through the current state of Banking and how the fusion of Metaverse and Banking is creating an interesting ecosystem that enables wider participation.
Traditional Banking Ecosystem
Banks have worked on a pen and paper model before the Information Technology revolution. This was the time when customers had to visit the bank for almost all activities. At the turn of the 21st Century, the IT revolution led to a large-scale expansion of banking services. This was also the first time bankers used data as a cornerstone to make decisions.
An increase in mobile usage coupled with reducing data rates enabled customers to access banking services through their mobile devices. This growth in the banking sector eventually led to the birth of Fin-Tech which we see today. Growth in innovations reduced the time required to carry out regular banking activities.
On one hand, we have processes that can be carried out at the click of a button, but on the other hand, we find that banking services have become purely transactional with barely any emotional quotient attached to them. Moreover, customer funds are still under the control of centralised authorities in the current banking system. Centralization increases the risk of funds being compromised.
These gaps in the current banking system can be filled with a much more interactive and decentralised solution – The Metaverse.
Future of Banking in Metaverse
The Metaverse ecosystem is the next stage of the internet evolution and an essential part of Web 3.0 technology. It blends the concepts of Blockchain, AR, VR, Artificial Intelligence, and Machine learning to make the user experience on the internet immersive. Users are part of an interactive Virtual world where they can play, buy, sell and even avail banking services.
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Analysts project that the Metaverse economy is set to boom in the coming years, and there are strong reasons to make this calculated assumption.
Reducing Technology Costs:
Hardware manufacturers are achieving economies of scale, thereby reducing the costs for producing Augmented reality and Virtual Reality equipment. When Facebook acquired Oculus, the price of an Oculus VR headset was roughly $600. But today, high-quality VR headsets from Oculus can be bought for less than $100. Technology will be within mass reach with dropping prices, and this can be a boon to the banking industry.
Change in Banking Experience:
Banking through the Metaverse will be a stimulating experience, unlike the current banking experience which is mostly transactional. The experience of transposing into a virtual world for day-to-day activities would be exciting for most of us, as we only get this experience while watching a film or playing a game.
Access to Talent and Customers:
Banks are currently limited by borders to run their operations. Banks often set up workspaces in markets where they intend to provide services.
Metaverse provides an unlimited potential to access customers and talent from all over the world. Imagine this, an Indian bank could have a relationship Manager from Europe who could be speaking to a customer from Australia through the Metaverse.
A Branding Arm for Banks:
Banks who have the early mover advantage in this space will grab customer attention and pave the way for the rest to follow. Adopting new technologies would be a great way to position the brand for the current youth who will be potential customers in the future.
With more youth showing interest in NFTs, Cryptos, and Metaverse, it is not far-fetched to assume that these youth will have a strong brand recall to the banks that position themselves effectively.
Present-Day Adopters of Metaverse:
BNB Paribas, JP Morgan, HSBC, and Bank of America are some of the banks which are currently making leaps in this space.
BNB Paribas has launched a Virtual Bank for customers to access their account information. JP Morgan set up a virtual space called Onyx in Decentraland. HSBC is tapping into the Sandbox Metaverse to invest in a piece of land.
Once the adoption of Metaverse picks up pace, more banks are set to follow.
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Metaverse is set to shape the future of banking. Close to 70% of bankers believe that Virtual Reality services could be a differentiator for banks according to an Accenture Report.
The Metaverse radically reduces the bottlenecks in today’s banking services, and it is practical for banks to adopt this new age version of banking to create a competitive advantage. It could be a reality that sooner or later, you might find yourself wearing flashy eye gear and visiting a bank in a Virtual space.