Metaverse in Banking: The Future of Financial Services!
Metaverse in Banking: The world of banking is rapidly changing with every new wave of digitalization. The latest change to hit the banking industry is the introduction of metaverse technology. In this article, we will discuss the business opportunity for metaverse in banking, the benefits of metaverse banking, the banks that have already entered the space, and how banks should plan their metaverse entry.
The banking industry has reached a critical juncture in its history, with technology playing a critical role. New financial technologies (NFTs), cryptography, and the metaverse are altering traditional banking practises.
They are bringing about new opportunities in the banking industry and giving customers a more tailored service. Some banking firms have already progressed to the metaverse, the major phase of banking evolution. So, let’s take a glance back at the revolutionary changes that have been made in the banking sector:
Phase 1: Traditional Banking
In the early days, banks relied on one-on-one interactions with customers in a physical space. This was a paper-based, manual process with a lack of financial product customizations and personalization.
Phase 2: Internet Banking
The digitalization of the banking industry took full force in the last decade. The first stage involved digitalizing existing processes to be accessed through mobile and the internet. The second stage involved creating new customer journeys to meet the digital-first demand of customers.
Phase 3: Open Banking
In the last three to five years, banks have opened up to be connected with third-party services through APIs. This has led to the emergence of neo-banks and cross-industry marketplace offerings by banks.
Phase 4: Digitalized Finance Banking
With the advent of Web3 and blockchain, a new secure, borderless, and fast banking economy has emerged. NFTs and cryptos have added entirely new assets to the financial market such as art, gaming, and real estate.
Phase 5: Metaverse in Banking Sector
In the last one to two years, the metaverse has gained massive traction across various industries, including banking. With a focus on virtual banking experiences, the industry is set for another massive revolution.
The Metaverse Opportunity for Banks
According to a report by Morgan Stanley and Goldman Sachs, the metaverse domain is estimated to be worth $8 trillion in the coming years. Banks have a critical role to play in this market, using technologies such as AR/VR and cryptocurrencies to reimagine their interactions with customers and offerings.
Metaverse Use Cases in Banking
Several banks have already entered the metaverse space and are exploring new use cases. JP Morgan has opened an Onyx lounge in the Decentraland metaverse for cross-border payments, financial assets creation, safekeeping, and trading. HSBC has invested in a plot at The Sandbox metaverse for engaging with gaming and esports fans.
Standard Chartered has acquired land in The Sandbox for experimenting and creating new experiences for clients on the metaverse. Siam Commercial Bank is the first banking group to build headquarters in The Sandbox, which includes a virtual hub, virtual land, and a hub to promote local artists.
Benefits of Metaverse Banking
The use of metaverse technology in banking offers several benefits to both banks and customers. Banks can offer a more personalised and immersive experience to customers, while also reducing operational costs and improving security. Customers can enjoy a virtual banking experience that is more convenient, efficient, and accessible.
How Banks Should Plan Their Metaverse Entry?
Banks should carefully plan their metaverse entry by conducting market research, forming partnerships with metaverse providers, and testing new use cases before full implementation. They should also ensure that their metaverse offerings align with their overall business strategy and meet customer demands.
The introduction of metaverse technology in the banking industry holds immense potential for banks and customers alike. Banks that embrace this new technology will be better positioned to offer a more personalized and efficient banking experience to customers in the future. It is up to each bank to carefully plan their metaverse entry and make the most of this exciting new opportunity.
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