Metaverse in The Financial Sector
Financial companies have been dabbling in Web3-enabled metaverse spaces as well as the more conventional Web 2.0 metaverse. In the context of web 2.0, we observe financial services firms utilising the technology for staff training; generating virtual "financial towns," telecommuting centres, and interaction spaces; and providing virtual investment advice and services. Despite the fact that these applications are quite developed, there hasn't been much of an influence on the core financial services business model.
We are starting to observe increasingly inventive models of involvement in the Web3-enabled metaverse. For instance, HSBC has invested in virtual real estate in The Sandbox specifically for interacting with e-sports fans. Neobank Zelf is offering embedded banking for players in the metaverse through its MetaPass in Discord, while Sokin, a London-based fintech, is developing infrastructure for executing metaverse payments, operations, and investments. Back-end assistance for financing virtual real estate in the metaverse is being provided by a number of businesses, notably a North American technology company called TerraZero. Numerous financial services firms are investigating the potential of the most recent metaverse development.
Application of Metaverse in The Financial Sector
As the industry's main focus turns from consumer entertainment to more expansive business applications and from specialised social interactions to a social network, the opportunities for the sector will only grow. Following are a few examples:
Organizations may establish digital branches in the metaverse to increase their user base, show users they are innovative, and even provide client interactions that combine more conventional digital or even physical channels.
Financial institutions, particularly the more established ones, are in a unique position to close the trust gap that has historically prevented a greater uptake of services like digital IDs, digital payments, or custody for NFTs, altcoins, or other digital assets.
Emerging products and services
Insurers and cybersecurity firms are well-positioned to grab a portion of this expanding value pool as cyber insurance for businesses and related services become more prevalent, perhaps even through creative collaboration and business models.
How Will Banking Work in The Metaverse?
One must first comprehend what a Metaverse is and the elements that make up this virtual representation of our current world in order to fully appreciate the potential of the Metaverse for banking. The puzzle's four distinctive pieces—technology, infrastructure, marketplace, and commerce—all work together to achieve this goal.
Each one is propelled by a different ecosystem member community that has all gone through a specific maturation process. Utilizing holographic and immersive technologies, the Metaverse will be created. Holographic technology projects digital items into the physical world, creating the sense that they are actually there. Through the use of VR, immersive technologies provide an immersive experience by disguising the physical world.
Digital versions of more advanced financial services may be developed to cater to these people as the metaverse eventually captures a larger portion of daily human interactions. Integrated bank-like services for wallet users in native metaverse locations, such as multiple currency cash management, could be instances.
The expansion of these applications will depend on how widely the metaverse is used. Additionally, the utility of present online or physical servicing must be outweighed by the value and ease of financial services in the metaverse. More financial service organisations will have to choose between investing and joining at scale, creating a minimum position, or doing nothing at all for the time being if involvement in the metaverse picks up steam.
The choice is based on four criteria: the willingness to wager on the metaverse's potential value; the capacity, talent, and capability to create a relevant position; the size of potential metaverse consumers and relevance for the current and future customer base; and the degree to which the metaverse vision aligns with a company's strategy and culture.
Another tactical decision is to stay out of the metaverse. Although the widespread implementation of the metaverse and the creation of sizable revenue streams in the financial services industry may take some time, many businesses may decide that making an early investment is a desirable strategic hedge, particularly given the growing integration with computerised native assets.