Although we all have been using online banking since the last two decades , the metaverse might significantly bring something new to the banking industry. It’s possible that metaverse may radically transform the way large banks interact with their consumers, provide unique services, and open up new markets. Furthermore, it has enormous potential to attract new types of consumers, given the profile of typical Metaverse users.
JP Morgan, the largest US bank, has already accepted metaverse and is utilising the innovative blockchain technology of the metaverse in financial transactions. Therefore, we can anticipate that the metaverse will be the future technology for the fintech industry. Let’s highlight how it was before the advent of metaverse and then compare how it has revolutionised the banking sector.
Finance Before the Metaverse
Customers and lenders used to have to physically meet in a two-dimensional environment to use a bank’s services or borrow money. The transactional procedures relied substantially on physical work. The bank’s services were only available to customers who were there physically. The transition from in-person banking to digital banking, where everything is done digitally and without paper, followed. The need of a customer’s actual presence has been eliminated. The widespread use of digital banking has resulted in a comprehensive revision of the customer experience, with new priorities placed on things like decentralised and regulated data security and a focus on increasing customers’ sense of pleasure.
As the success of digital banking depends on maintaining and growing client connections, it works much like technology companies. Digital banking, despite their best efforts, is neither personalised nor interesting to clients. Traditional banks’ customer service, which relied heavily on human relationships, has declined as a result. To provide digital services to customers, automate the back-office process, and keep up with ever-changing regulatory requirements, traditional banks are always pushing transformation programs. One may counter that the customer’s experience with a typical bank is impersonal and boring compared to that with a commercial or retail brand.
Traditional banks’ human relationship management, which was crucial to keeping customers, has been lost. Using the Metaverse’s interactive environment, financial institutions may be able to reach out to decentralised platforms and communities and interact with the future generation of clients in novel ways.
Finance and Customer Service With Metaverse
Despite the fact that the metaverse is a kid, it has begun to attract attention from the finance and banking industry, which has seen tangible advantages from cryptocurrencies and NFTs. As a result of the widespread adoption of NFTs, cryptos, and central bank digital currencies (CBDC), all made possible by blockchain technology and Web3, a “creator and virtual” economy has emerged, allowing for the creation of digital works of art, virtual properties, and play-to-earn (P2E) video games. The advent of the Metaverse, NFTs, and decentralised finance (DeFi) has given birth to a new digital marketplace that is decentralised, open, and transparent.
Around half of the world’s banks are projected to use augmented reality and virtual reality by the end of the decade, both as a channel for consumer transactions and to increase staff engagement. Bank of America, for one, has introduced a virtual reality (VR) training program that mimics real-life encounters with consumers, while BNP Paribas, for another, has introduced a VR banking app for users. Additionally, the crypto finance platforms like bitcoin union have already corporated in executing fast transactions. We can predict that metaverse will reshape the customer service.
Metaverse Banking: A Promising New Frontier Opportunities For businesses
JP Morgan’s strategy for the Metaverse relies on the idea that a strong and adaptable financial framework is essential for the success of the digital world. Because of this emphasis, its payment and finance architecture will foster more interoperability as part of its plan. Because of this infrastructure, people will be able to easily move between the digital and real worlds.
The first step for financial institutions in the Metaverse is to locate prospective clients there. Spending time learning about their situation and providing tailored financial services is a time-consuming process. Property investment in the Metaverse is thriving due to the increasing demand for virtual homes. Lending money to those who want to invest in real estate and helping them make use of mortgage services are both beneficial.
The Metaverse market has a strong following among young people who are interested in creative expression, gaming, and entertainment. Financial planning assistance, loans, opening bank accounts, and other services are all within reach. Customers are encouraged to utilise AR/VR devices for banking purposes such as seeing account balances, making payments, transferring funds, and other financial transactions. During the customer lifecycle, banks may reestablish contact with clients and forge deeper bonds.
In the Metaverse, banking services such as cash withdrawals, deposits, and engaging with customer support agents will be accessible. Consumers will be able to see their financial records in three dimensions, much as they would a compact report, and exchange information between the two formats with ease.
Metaverse Banking: Challenges That Need To Be Addressed
In spite of the Metaverse’s hopes for the speedy adaption of financial institutions, there are many unanswered issues in this rich virtual environment. As Web 3.0 is the backbone of DAOs, digital currencies are used for all financial dealings. For there to be any sense of confidence in the Metaverse, its transactions, interactions, and experiences must be regulated and monitored. Among the most difficult obstacles to overcome are:
- Regulation and Safety
Formerly, fraudsters might masquerade as someone else and use a victim’s credit card or other tangible assets for illegal activities. Is it possible to guarantee everyone’s safety in the metaverse with the current set of rules and safeguards?
A similar situation exists in the Metaverse, where hackers may take the identities of other users and use them to steal their digital possessions. One of the most pressing issues in the Metaverse will be the control of identity theft and the verification of identities. To facilitate decentralised trade, the metaverse is commonly believed to rely on blockchain (Web 3.0) technology.
A customer needs supplementary technology in their house in order to join a metaverse and participate in an immersive experience. Currently, just a handful are worth the price, including Oculus from Facebook and the impending PSVR from Sony, however, Google and Apple are said to be making significant strides in this area. Some individuals may get nauseous from such prolonged exposure, which may discourage them from exploring the metaverse.
The Metaverse is expanding as more individuals and businesses explore ways to work together. The financial market of the Metaverse will be distinguished by the introduction of novel technological solutions and the creation of new currencies.
Banks may use this chance to restore banking’s altruistic spirit by earning customers’ confidence. The younger, more technologically adept generation is poised to become the sector’s core customer base. Banks need to market themselves as sources of financial knowledge, counselling services, and communication experts. The financial market of the Metaverse will be distinguished by the introduction of novel technological solutions and the creation of new currencies.
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