In the immersive 3-D virtual world (or game) known as Decentraland, where users interact in real time via avatars, Metaverse banking has virtually taken over the banking industry.
Decentraland, which was launched in 2017 and is partly controlled by users, is based on the Ethereum blockchain. According to CoinMarketCap, it had a market cap of approximately $1.3 billion at the end of January.
Decentraland is a precursor to the much-anticipated metaverse, which J.P. Morgan predicts will be a $1 trillion market opportunity, which is why banks have created this experience.
The Metaverse: What Is It?
It refers to the general way in which we will use the internet in the future. In point of fact, it is more of a future event in which we will have a different perspective on the digital world and the internet.
No matter where they are in the real world, people can work together and feel connected in the metaverse. Avatars, animated images that represent people and interact with people and things in the metaverse, are a common means by which people interact.
The metaverse will need to make use of a number of innovations, some of which have not yet been realized, in order to be fully realized.
These innovations include decentralized web applications that give users control over their data and identities, spatial computing, which recreates physical worlds in digital ones, and digital twins, which online mimic the actions of human users in remote locations (you raise your hand; The hand of your digital twin is raised).
However, a significant amount of processing power is required, and some of the necessary technologies are not yet ready.
The metaverse is in its infancy; and it is currently being constructed, with numerous experiments and competing platforms vying for dominance. Banks are also looking into this new area, not just on their own but also in strategic partnerships and joint ventures with tech companies, to learn about the possible use cases and help make platforms into real vehicles for economic opportunity.
Some banks and other financial institutions are starting to use their outposts to teach their customers about their products and financial literacy, build their customers’ knowledge, and start getting them ready for the hybrid digital-physical world that is coming.
Banks are currently placing a greater emphasis on customer engagement. The metaverse has been actively utilized by some banks to foster community and sustainability. For instance, DBS bank launched ‘LiveBetter’ in 2021, a platform designed to inspire customers to live more sustainably.
DBS launched DBS BetterWorld on the Sandbox in 2022, which also supports environmental, social, and governance (ESG) initiatives. A subsidiary of Animoca Brands, The Sandbox is a decentralized virtual world where users and brands purchase plots of “land” to create a singular experience.
DBS recently acquired a three-by-three “plot,” or nine virtual units, of land on which it is developing an interactive experience to promote a more environmentally friendly world. DBS intends to collaborate with communities, businesses, the government, and technology.
In an effort to provide customers with access to ESG investments and assist them in living more sustainably, the bank intends to make use of the metaverse to promote its ESG agenda throughout its banking and business practices.
The bank’s platform, DBS BetterWorld, allows Sandbox visitors to learn about these ESG issues, particularly those pertaining to business. The bank also makes use of this platform to profile social entrepreneurs and the novel business models they use.
Every bank that wishes to participate in the metaverse must make a strategic choice about which technology to use and how to do so. Content that will help users be entertained and engaged is the primary focus of some banks. In April, the digital services and lifestyle platform imagin of CaixaBank announced the launch of imaginLAND, which it called “its space in the metaverse.”
Customers can use simulators for savings products, mortgages, and personal loans to walk through the two-floor branch and learn about BPI’s offerings at BPI, the Portuguese subsidiary of CaixaBank. They can also play miniature golf online.
Before looking at external use cases, Bank of America’s (BofA’s) strategy is to investigate internal aspects of the metaverse and test associates’ responses.
BofA is testing an internal metaverse experience in which players collaborate to solve a specific puzzle or problem. These encounters at present use VR innovation and intend to reproduce homeroom preparing for group working, for instance, since discussing group building doesn’t necessarily mean better groups.
This technology may also be utilized by BofA for both internal and external job candidates. Metaverse technology can let candidates see what it’s like to work in a specific position for a day to see if they’re a good fit. By providing VR headsets to prospective candidates at a physical career fair, hiring managers across the United States can interact with them.