Do you remember the first time you went to the bank to open a bank account or get your first card? That first interaction with the bank would have set the foundations for a long-term relationship, right? Let’s just say that this happened in another realm because today’s digitally adept generation would prefer experiencing a virtual journey with the banks.
How? Through the metaverse.
It’s an immersive virtual world used by leveraging virtual reality as well as augmented reality. The purpose of this 3D virtual world is to facilitate a social connection. Since its introduction by Meta in 2021, it has created quite a storm in the world, especially in the banking and financial services industry (BFSI). Let’s discuss it in detail.
With the metaverse serving as a touchpoint of an evolving digital cosmos, the banking industry can reap greater gains from it. More than 25% of individuals are expected to spend at least an hour every day in the metaverse for their business needs. Hence, the need for banking or fund transactional convenience is evident. Considering the convenience factor, today’s users do not prefer physical interactions with institutions and rather get things done promptly without leaving their homes. This necessitates an extraordinary progression of personalized user experiences.
In this upgraded “phy-gital” epoch, product and service innovation is the focal point of your customer. Knowing that digital banking practices have already come into play; the forward-looking banks will find less difficulty in adapting to the distinct characteristics of banking in the metaverse. The metaverse can help banks build better customer relationships. It can also be positioned in the growth strategy as a means of garnering lasting customer engagement through digital channels with more interactivity and flawless delivery of banking services.
If you’re thinking of how metaverse will change banking or how your bank can benefit from Metaverse, know that the Metaverse bandwagon is expected to accumulate a market size of USD $800 billion by the end of 2024. If we trickle it down to the financial services industry, the market share is expected to increase to USD $50.37 billion by 2026 with a CAGR of 20.93%. Imagine the magnitude of opportunities it can create for banking institutions. Some of them are discussed below:
Today’s customers are well-informed about evolving technologies. The banks need to tailor their offerings according to the needs of their tech-savvy audience to avoid customer churn. But that is for the existing clientele, what about the new ones?
Introduce virtual offerings like JPMorgan Chase. In February 2022, the Bank launched the global banking industry’s first-ever lounge and office in the Metaverse. Their audience can now switch to JPMorgan’s office in the metaverse and consult their avatar advisers for banking needs. That’s how banks can boost their market share through the metaverse.
The metaverse enables banks to virtualize their services and their customers’ interactions with them. This means the customers will be able to perform all their banking activities virtually without getting involved in the tiresome process of physically visiting the branches and getting their desired tasks executed. From cash deposits/withdrawals to account queries, and scheduling meetings with the avatar banking advisors, Metaverse can make all of that happen.
HSBC, Standard Chartered, Siam Commercial Bank, Caixa, and others have already announced the acquisition of land on the Sandbox or Decentraland this year, or plan to do so soon. It shows the vitality of the metaverse for the banking industry.
Metaverse transforms the roles of the brand and its customers. The banks in the Metaverse will not market their offerings to the customers but rather with them. That’s because the customers will become more like collaborators than partners in the Metaverse.
The banking institutions will have to strive harder to build trust among their client bases. To do so, the BFSIs should be on the lookout for new products and services that do not directly resonate with their vertical. For instance, the Japanese banking giant, Sumitomo Mitsui Banking Corp. (SMBC) Partnered with HashPort, and hinted at its entry into the NFT industry. SMBC intends to create a Token Business Lab in partnership with HashPort to cater to large-scale institutions in terms of NFT as well as decentralized technology services.
Such a venture will help SMBC attract an audience towards its NFT vertical, but also towards its banking institutions. It’s a way of connecting completely different customer segments towards your core as well as subsidized products and services. Eventually, it will contribute to an upward trajectory of your business growth.
The rapidly expanding metaverse economy is an untapped avenue for banks to grow quickly. The hospitality management, gaming, and other industries have already shifted to the metaverse. The banks must decide what role they will play and how they will leverage this chance to expand their brand. The metaverse renders greater stability to the BFSIs and if not adopted soon enough, it can also contribute to the banks’ downfall.
Discover more about the metaverse and its implications in banking at www.techvista.com or on LinkedIn.