While non-fungible tokens (NFTs), decentralised applications (dApps) has the potential to shake up the banking world, probably the most promising and engaging is the metaverse. The virtual world guarantees to completely overhaul banking, each for the purchasers and the banks as well.
Cryptocurrencies have had an unprecedented growth rate within the last two years or so. They’ve ballooned right into a trillion-dollar market with a whole lot of tokens already in existence and much more popping up day by day.
Nevertheless, uncertainty around these burgeoning assets meant that their acceptance by the standard finance industry wasn’t exactly forthcoming. But due to the rapid mainstream and institutional adoption of digital currencies, banks and other financial institutions at the moment are clamouring to integrate crypto into their business models.
Many adjoining products and technologies like non-fungible tokens (NFTs), decentralised applications (dApps) and the metaverse are also beginning to pop up. And while each of those has the potential to shake up the banking world, probably the most promising and engaging is the metaverse. The virtual world guarantees to completely overhaul banking, each for the purchasers and the banks as well.
The long run of banking is within the metaverse
Currently, the metaverse is relegated to the gaming space, with games like Decentraland and devices just like the Oculus Rift and the PSVR 2 seeing regular growth. The gaming industry even racked up global revenue value $154 billion in 2021, which is not any small feat for an industry that gained popularity only recently.
Nevertheless, the subsequent frontier for metaverse-related technology may very well be the banking industry. Experts predict that the metaverse can completely revitalise the working and perception of banking. And it’s not hard to see why; you possibly can visit your bank without stepping out of your property, just pop on a VR device and also you’re there!
Investment giant Goldman Sachs mirrors this outlook with predictions that the metaverse might be an $8 trillion industry within the near future. They imagine that the virtual economy created by the metaverse will boost the digital economy, which already accounts for 20-25 percent of the worldwide economy.
Sensing the chance, many banks have already begun exploring metaverse and blockchain technology. Acorns, a number one American FinTech company, already provides a debit card with an AR technology implanted in it that might be viewed through a smartphone.
Similarly, global banking outfits like BNP Paribas and Citi Bank have also made forays into the virtual world. The previous has launched a VR app through which customers can perform transactions virtually, while the latter is testing holographic workstations for financial trading.
South Korea’s Kookmin Bank has also began a virtual branch that provides one-on-one consultations between customer and worker avatars. And the newest to enter the metaverse is banking giant JP Morgan, which launched its virtual lounge, Onyx, on the Decentraland virtual world.
VR/AR peripherals, the primary hurdle
Metaverse is an amalgamation of assorted technologies like VR, AR, Artificial Intelligence, Machine Learning and blockchains. They’re an integral aspect of the metaverse and make it possible for people to interact in a 3-D virtual space.
The issue is that we’re on the very early stages of making AR and VR peripherals for mass usage. These devices have to be reasonably priced, have robust micro-processing capabilities, a protracted battery life and easy-to-handle dimensions.
In brief, these devices need to succeed in the ubiquity level of present-day smartphones, which might be a protracted and arduous journey. However the promise of those devices is already here, with multiple VR devices already available and doing well available in the market.
The changes metaverse will bring to the banking structure
Metaverse has the potential to make improvements and optimise the banking experience for people in some ways. A few of these improvements can have a monumental impact, while others will work behind the scenes to reinforce customer experiences.
Engagement in a 3-D environment
Metaverse will create a web-based virtual space where customers can transact, access banking information and avail of assorted banking products from the comfort of their homes.
This might augment otherwise painful processes comparable to checking account opening and loan applications. Furthermore, these virtual services could draw the eye of a brand new generation of users, one which has been mostly apathetic towards the standard banking industry. Banks would now have the option to organise virtual events and functions within the metaverse that would attract recent customers from this demographic.
The potential of latest products
Together with the metaverse, adjoining products and technologies like cryptocurrencies, NFTs, and virtual goods can even rise. The implementation of NFTs and virtual real-estate might be a vital facet of the metaverse. And to buy and sell these products, banks will need to just accept cryptocurrency through on- and off-ramp methods.
NFTs are prominently displayed in existing metaverses like Decentraland, and banks can provide loans and accept NFTs as collateral within the virtual space. Banks may facilitate payments for NFTs by establishing dedicated NFT exchange points within the metaverse.
Virtual real estate is one other asset banks can latch onto. Already, virtual pieces of land in games like Decentraland and Sandbox are being sold for thousands and thousands. Banks can provide business loans to customers for purchasing these virtual plots.
Conclusion
As we are able to see, there might be a myriad of advantages of banking within the metaverse, but the fact is that it continues to be ways off in the longer term. Nevertheless, with proper implementation, the metaverse may very well be useful to each the purchasers and the banks.
(Edited by : Priyanka Deshpande)
First Published: Apr 4, 2022 6:29 PM IST