Metaverse Use Cases In Banking – How Can Metaverse Be Used In Banking?

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    In the ancient times, individuals preferred banks for depositing their hard-earned money and also for withdrawing banknotes. Afterwards, ATMs, debit cards, and credit cards came into existence. It led to the rise of the trend namely- electronic payments that made a huge contribution to eliminate the requirement to carry cash or to visit ATMs.

    Banking industry is one of the significant industries as well as primary sectors to which each wave of digitalization is influencing a lot. Have you ever imagined what will happen if metaverse technology is around the corner of banking? Well, the metaverse in banking enables individuals to enter all bank branches virtually. Apart from this, it is also possible for customers to take the assistance of their digital avatars to enter the virtual banks, deposit money digitally, and also take out cash. 

    With the involvement of the metaverse technology in the banking institutions, it has become more convenient for users to imagine taking advantage of the option to make any payment with a digital currency. Banks issue cryptocurrency prominent as digital currency and also digital tokens from a digital wallet such as Ethereum. Altogether, such things will definitely come true with the entrance of the banking institutions in the metaverse.

    Metaverse Users Worldwide – Metaverse Statistics to Prepare for the Future

    Do you have the keen desire to understand the metaverse use cases in banking? If so, it’s essential for you to look at the evolution of the banks. This article will surely provide every customer with a bit more information related to the metaverse banking sector, banking before the emergence of the metaverse, evolution phases of metaverse banking, and more.

    Without much ado, let’s proceed to take a look at all the facets related to the metaverse banking as mentioned in this post.

    “ By 2026, it is anticipated that 25% of individuals will spend at least an hour daily in the metaverse.”

    Gartner 

    What is the role of metaverse in finance industry?

    According to this study, metaverse technologies could help the region’s economy in a big way, and the Kingdom of Saudi Arabia’s economy could get a boost of US$20.2-38.1 billion in GDP by 2035. These benefits could be worth $8.8–$16.7 million in the UAE.

    The metaverse is a virtual reality space built on blockchain technology with many unique features that can transform the banking sector

    Metaverse banking: Offer customers the ability to view their balance, pay the bills, and make transfers through AR/VR platforms, customer service support through AR VR.

    Metaverse can leverage, the current infrastructure and scalable medium of exchange of the banking industry and evolving central bank digital currency

    Banking in the metaverse gives institutions a chance to rethink how they work with their customers and how they can use avatars to show empathy.

    Banking in the metaverse will require a change in technology and a new phase of connected virtual experiences using things like artificial intelligence, generative AI, virtual reality, and augmented reality.

    Metaverse connects the digital and real worlds, banks have a chance to shape digital ownership and new economies. Customer services thourgh AR VR will be the major change bring by Metaverse.

    Banking Before The Emergence Of Metaverse

    Conventional banking experiences have been a regrettable memory of the real world where two dimensional parties are involved to take advantage of a bank’s services. A few years ago, there was too much dependency on manual work to accomplish transaction processes. And it was a must for almost all customers to be present physically to avail and lend services.

    After some time, there was the transition from conventional banking experiences to online banking. In digital banking every transaction became paperless and performed via digital channels. In such a banking system there is not any requirement of physical presence of customers. Digitization of banking services led to improvements in customers journeys, their satisfaction goals, and also demand for managed & decentralized data security.

    Digital banking is concerned with operations similar to technological firms which include high-end technologies in their services to build & improve customer relationships. So, ultimately digital banking is convenient for customers and  it’s much engaging & customized.

    Overview Of Metaverse Banking Sector

    As per the point of view of tech-savvy generation, the metaverse is the virtual space powered by numerous high-end digital technologies. These technologies include- Blockchain, AR, VR, Smart Contracts, and AI. All of these advanced technologies create an immersive experience for all users where they can wear VR headsets and have an experience of the virtual world.

    However, the metaverse, one of the evolving spaces, has been the talk of the town of the gaming world, but it has also very significant use cases in other industries too. This virtual space has vital use cases for almost all industries. That’s why the banking business has also begun trying its fate in the metaverse. Besides, it has also started regaining the relations that it has with its clients a few years ago.

    Why Are Banks Setting Foot In the Metaverse?

    Banks are incredibly one of the most useful sectors with the high-potential to serve all demands for a digital currency in the metaverse world. The metaverse, a virtual world with extensive ability to offer banking sector exclusive abilities to promote augmented reality and virtual reality. Besides, it also provokes the relationships between their clients as well as their employees. So, ultimately the metaverse will enable every banking institution to recapture human emotions and to uplift their business.

    What Business Possibilities Does The Metaverse Offer For Banks?

    According to the estimation of Goldman Sachs and Morgan Stanley,” the metaverse economy could be valued as much as USD 8 trillion.”

    “ It is expected that the size of the metaverse financial market will be worth USD 107.06 billion by 2027, growing at a CAGR of 21.33%.”

    In general terms, banks are one of the best brands that are positioned to explain the increasing demand for digitally native currency as well as identity in the metaverse. In addition to the emerging metaverse economy’s value in US, almost all banks have the golden chance to utlize advanced technologies such as-VR/AR. It enables them to reimagine the ways that they can follow to connect with their employees and clients.

    To be very precise, metaverse, a virtual space provides banks with highly advantageous opportunities to offer a piece of advice to customers and also make strong relations with them. Which information is not possible to acquire in app alerts or text messages, all those things are entirely possible in the metaverse banking scenario. And it’s the belief of around 47% of bankers that by 2030, customers will begin using AR/VR in the form of an alternative channel for transactions. 

    Metaverse In Banking System: Stepping Into A New Digital World

    The metaverse is reassuring to elude all the differences between digital platforms. Besides, it is also leading the ways that explain the process of data stream and operations in an immersive way. This way, it’s certain that the metaverse will build up new industries as well as ultramodern ways to communicate with others.

    Undoubtedly, it is absolutely the right time for all bank bosses to review their businesses in the years to come. It will also be better for them if they develop a virtual space known as metaverse that will enable them to provide a remarkable experience to their clients along with the routine services that they already offer them.

    Banks In Favour Of Metaverse 

    There are numerous banks that are embracing the metaverse. A few of them are-

    Kookmin Bank:The South Korean Bank

    This bank collaborated for the purpose of launching the KB Metaverse VR Branch Testbed. Now, it has become possible for their customers to access advantageous banking services in the metaverse through VR headsets of Sharebox. The metaverse branches of this bank involve virtual personalities that enable customers to navigate the whole branch as they are doing in the real world bank branch.

    Quontic: An American Financial Institution

    ‘’Banking once required consumers to visit a location and rely on printed documents to manage their money with personal support from a teller; today we carry all of that power in our pockets on an app, but the experience is cold. In the not-so-distant future, our customers will have the best of both worlds, and this outpost is the first step towards that level of service.’’

     — Steve Schnall, CEO of Quontic Bank

    Quontic, a bank that made an announcement regarding the launch of its settlement in Decentraland last year. According to Yahoo Finance, Decentraland has a monthly active user base of about 300,000 people and 18,000 daily users. This bank is well-known for its digital-first mindset, as it was the first bank to provide its account holders with bitcoin rewards. 

    So, setting up a virtual bank branch is just like a natural activity for this financial institution. One of the interesting things about this bank is that it has an aim to cover all the gaps between offline and online banking operations. In addition to this, it also offers more personal experience to individuals.

    Onyx By J.P. Morgan

    It’s an American banking giant that was launched due to the sudden rise of customers’ interest in the Ethereum-based services. The best thing about this banking institution is that it offers virtual banking services as it provides customers within its branches in the real world.

    HSBC:The British Bank

    ‘’At HSBC, we 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. 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.’’

    Suresh Balaji, CMO, Asia Pacific, HSBC

    This bank also comes on the list of banks that support metaverse. It has purchased a piece of land at The Sandbox metaverse with the hope to utilize this plot to make connections with gaming enthusiasts, sports, e-sports,and more. According to HSBC, “the Sandbox has been downloaded 40 million times and has 1.2 million active monthly users.”

    There are a plethora of brands that have partnered with “The Sandbox”. A few of them are- Gucci, Adidas, WMG( Warner Music Group), and more. It enables them to provide their customers with immersive banking services.

    What Are The Evolving Opportunities For Banking In The Metaverse To Scale Up?

    Initially, banking institutions identified their potential customers who were already found in the metaverse. And it took much time to get the exact meaning of the customers’ needs and offer them financial services accordingly. It’s not a matter of surprise that real estate in the metaverse is booming and it’s happening because of the high-demand for buying properties in the virtual space. There are also many advantages for offering loans and leveraging mortgage services to all those ones who have the desire to invest in real estate.

    There is a range of young customers who with a high-level of interest in art, gaming, and entertainment are showing a keen desire to utilize the metaverse marketplace. In the virtual banking world, there is a wide scope to provide the users with a range of services in terms of- loans, financial planning services, creating depository accounts, and much more.

    Virtual banks influence customers to utilize AR or VR devices to verify the balances in their accounts, make payments, transactions, and transfer money. Banks in the metaverse have the ability to rejoin customers and also develop meaningful relationships throughout the customer journey.

    Banking systems in the metaverse will be able to offer services that are already available in the real world. These services include- depositing money, withdrawals from ATMs, and intercommunicating with representatives to have assistance & a piece of advice. In the virtual banking systems, customers will surely be able to have a glance at their accounts, and transfer their data as well.

    Evolution Phases Of Metaverse Bank 

    Traditional Banking

    Conventional banking is known as the bicameral banking phase governed by central banks that depends on face-to-face interactions with customers in the real world. This stage was known for paper-based statements and heavy dependence on manual work. And in such a banking system there was an absence of custom-made final products.

    Internet Banking

    It’s just past ten years when digitalized banking industry came into full force. It was categorized into two main categories. The first one was- where all the existing processes were computerized so that individuals can access them through mobiles & the internet. Whereas the second stage was where customers began their new journey for addressing the online demands of customers.

    Open Banking 

    It has been just three to five years since the banking industry opened itself to be interlinked with third-party services via APIs. It has led to a multitude of neo-banks and also cross-industry marketplaces that banks offer. These marketplaces are- healthcare, automotive, energy, etc. 

    Digitalized Finance Banking

    With the emergence of the latest technology namely- Web3, Blockchain has created a fast, new, borderless, and secure banking economy. In such scenario, NFTs and cryptocurrencies play a big role and also add completely new assets to the whole financial market, like gaming, art, and real estate.

    Metaverse In The Banking Sector

    In the last a few years, the metaverse, prominent as the virtual world has acquired tremendous traction among a plethora of industries. And the interesting thing is that banking is one of those industries. It has leveraged the virtual banking experience and also revolutionized the whole banking industry.

    Metaverse: The Next Frontier For Digital Banking

    It has been observed that the banking and financial institutions explore the metaverse across four major dimensions, that is known as “ WINNOVERSE.” The literal meaning of this term is “winning on the metaverse.” and these four dimensions are-Re-imagine, Invent, Co-create and Simulate. 

    Let’s take a dive in to know how financial organizations will explore these four dimensions.

    Re-Imagination Of Banking Services In The Metaverse 

    It’s not a matter to deny that digital banking offers individuals flexibility to perform financial activities anytime and anywhere. But, the negative aspect related to it is that there was an absence of empathy that is possible only with human touch. Grateful to the metaverse that makes a promise to offer digital capability with the integration of customized human effects.

    In the virtual banking institutions, it’s quite possible to imagine customers walking into the branch of the bank. And it also offers the relaxation of not standing in the long queues and wasting the valuable time in waiting to acquire the ATM card. The digital avatars of the customers just walk over in the virtual branch & have engaging as well as captivating experience.

    This way, digital avatars of the representatives of branch service automatically provide all the customers with support, relevant demographic information, and also their financial history. One of the fascinating things about the banks in the metaverse is that it enables customers’ digital avatars to touch & feel the available products, scan around, and also explore the entire virtual bank branch as they do in the real world bank.

    A few of the metaverse banking’s services have mentioned as below, let’s explore them-

    Intuitive Account Services:

    In the conventional banking systems, the individuals received printed statements. But with the emergence of metaverse banking, it has become possible to obtain it in the digital form. Metaverse, the virtual space, offers an engaging view of multi-dimensional dashboards. Individuals with their digital avatars can easily touch a particular line item and also explore patterns of spending income as well as advisory tips. It enables them to optimize the services and further leverage them too.

    Eye-Captivating Lending & Mortgage Services:

    Metaverse provides users with an advanced level of opportunities to have an experience of multi-dimensional tours of assets as per their interests. In the virtual space, it’s quite possible for individuals to review a range of assets & properties that they have the desire to purchase merely in a short span of time. It is also one of the simplest tasks to take advantage of the most suitable financing options to accomplish & explore the purchase with the help of your representative avatar of bank services.

    Reanalyzed Wealth & Investment Advisory:

    In the virtual bank branches it’s possible for customers to engage with the digital avatar of a wealth advisor. It enables them to acquire insight on financial performance of several financial products for making informed decisions more conveniently. 

    One of the most interesting things is that customers can make trading decisions via analyzing the multi-dimensional scenarios already existing in the market. Such performances can be more rewarding as compared to the activities related to the real world banking institutions. In addition to this, it’s quite one of the easiest & the most convenient tasks to make a comparison among the insurance options with the help of the digital avatars of the insurance agents. Overall, it can be proven a boon for the bright future of the individuals involved in the digital banking sector. 

    Invention Of New Products For The Metaverse

    The metaverse generates new avenues for banking institutions to offer financing & insurance products for the individuals. It enables them to buy virtual and digital assets in the metaverse. 

    The metaverse is the mirror of the real world that is the representation of a range of virtual plots, shopping malls, establishments, and much more. Customers as well as investors are involved in the purchasing of numerous consumables such as- games, music, videos, wearables, and art collections. The virtual finance world offers the backbone to purchase and sell such sorts of digital assets through their digital wallets famous as crypto wallets. Furthermore, the financial metaverse can also offer individuals a range of financing options and also insurance products for these purchases.

    What Are The Advantages Of Metaverse In Banking?

    Metaverse offers a plethora of benefits for the traditional banking institutions. These benefits impact customer experience and also open up brand new financing models for banks. Let’s explore these benefits-

    • Banks have begun providing training to their employes on VR
    • Offers banks multiple opportunities to connect with a new target audience
    • Enable institutions to relook at their ways of interacting with customers
    • Ability to deliver empathetic services to customers through digital avatars
    • Provision of high-touch banking services to the customers
    • Assist individual to have virtual look into the revenue and take part in the virtual financial planning sessions
    • Expansion of banks’ physical experience in the virtual space via mimicking events
    • Invention to innovative banking products

    To wind up things, 

    Nowadays, banking institutions are on the edge of a never-seen-before digital evolution. Metaverse in financial sectors is much more than a technological U-turn that will open new sources of incomes. It is one of the recognized platforms which banking institutions can utilize to reconnect with their customers. This way, it becomes quite possible for banks to enter a new world and also make cusomized & emotional engagements with customers.

    Undoubtedly, there is a range of world’s leading banks that have already thrown themselves into the metaverse. It defines the openness of those banks towards digitalization. Altogether, banks that have not taken the dominating position will end up their research for a space in the Metaverse ecosystem, where they can acquire leadership.

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