The banking industry has been a key part of our world for over a century. Although there have been improvements, the banking sector remains an essential part of our lives. Banks love to leverage technology and innovation to stay on top of their game. And that’s what most banks are doing with blockchain technology.
In the past two years, blockchain technology has enabled an entirely new economy that is borderless, secure, and fast. It also stays on par with the traditional banking structure and system. Trends from the blockchain space such as the metaverse, NFT, and DeFi are all popular concepts enjoying mainstream adoption. Therefore, in this article, you will learn how banks are planning to use the metaverse.
Banks in the Metaverse
The metaverse has become one of the buzzwords of the internet from late 2021 through 2022. Since the year began, the metaverse has witnessed the swift transition of big tech giants like Tencent, Meta, and Microsoft. These global corporations are all making big bets on the metaverse. There is little doubt that the internet is on the verge of evolution.
Therefore, the metaverse is a web of 3-D virtual worlds where users can interact with one another and a computer-generated environment. According to experts, 25% of people will utilize the metaverse at least once a day by 2026 for pleasure, commerce, retail, education, and social networking.
Banks in the Metaverse would be a fantastic possibility 🏦
Easy conversion of Metaverse tokens to fiat and vice versa would be attractive 🔁
😆 And ensuring more opportunities for gamers to earn 💸
— METATUBE (@MetaTubeWorld) June 29, 2022
Moreover, the metaverse is made up of various unique virtual reality platforms. This includes Decentraland, The Sandbox, and Somnium Space. Some work mostly as hosts for video games. Others, like Decentraland, allow users to create avatars that reflect themselves and participate in real-world activities like marriages and property purchases.
As a result, with a steady increase in these activities around the metaverse, a handful of banks have decided to scale up with the trend and are making the transition into the metaverse. The majority of these banks have purchased virtual land and opened retail locations. They do this to expand their brand and connect with the younger generation of users.
As a result, JP Morgan was the first bank to enter the metaverse with so much showy activity, meant to draw attention. With its lofty stride, JP Morgan acquired a large plot in Decentraland where it featured a prowling tiger in its Onyx Lounge. Shortly after JP Morgan’s arrival, other banks joined the train. This includes South Korea’s Kookmin Bank. The firm opened up its customer service options by providing one-on-one consultations in the metaverse. This service, offered by Kookmin, is a model and a distinct feature from other banks in this regard.
JPMorgan, one of the biggest banks in the United States, made headlines earlier this year by publishing a paper suggesting metaverse technology was a "one trillion-dollar opportunity," along with establishing its own virtual headquarters in the Decentraland (MANA) metaverse.
— Didier Peran Ganthier 🇭🇹 (@didierganthier_) June 29, 2022
Other Financial Institutions in the Metaverse
Going further, there are other companies that are willing to get into the metaverse:
- HSBC: This featured the opening of a branch in the established Sandbox region of the metaverse.
- Sokin: This UK-based payments fintech is not left out of the list. While the space witnessed the transition of multinational brands during its peak, the brand announced its entry into the augmented reality platform. Also, this fintech has set out to enable full e-commerce payments for the first time in the metaverse. This will subsequently allow brands and businesses to grow from their physical stores into the virtual world.
- Fidelity: This major financial services firm with $11.3 trillion in assets under administration. The brand joined the metaverse with the opening of an eight-story learning center and the launch of a metaverse exchange-traded fund (ETF). The massive development features a multi-level design, complete with a lobby, dance floor, and rooftop sky garden for users to explore on foot or even through teleportation.
- Standard Chartered and CaixaBank: These banks are not left out of the metaverse move. Standard Chartered reported in May 2022 that it had obtained a parcel of land in Decentraland. Caixa, a Spanish bank, took its own spot as it acquired a virtual cafe on Decentraland.
The metaverse with Fidelity Investments is not the metaverse for me pic.twitter.com/x37q2xOUvb
— spencecoin.eth 🦊💙 (@spencecoin) May 8, 2022
How Will Banks Profit From the Metaverse?
There are numerous ways that banks can profit from the metaverse and vice versa. Banks are often trusted organizations. So, this means that the arrival of banks in the metaverse will bring along credibility to the industry. But that is not all. Banks will facilitate a new mode of digital payment in the metaverse.
Trust is an asset that banks have in abundance. Therefore, this means that people trust banks since they are recognized and regulated. So banks will try to act as trusted guardians of digital assets. They can also provide customers with virtual wallets that are easy to use and comprehend. This will make payments easier to facilitate.
Currently, using a combination of fiat currency and cryptocurrencies to make purchases in the metaverse is cumbersome and inconvenient. It frequently calls for absolute confidence between the parties. However, banks can provide the legislation, norms, and services required for the quick, easy, and frictionless movement of digital assets.
Here are some ways banks can profit from the metaverse:
1) Leverage NFT Opportunities
Many people are already investing in NFTs and conducting business in the virtual reality sector. NFTs can help individuals facilitate identification during public and social events. This way, NFTs have the potential to act as a bridge between users and the metaverse. They might also make it easier to determine who owns digital goods that are exclusive to virtual reality.
Moreover, Banks can find ways to leverage the growing recognition of NFTs. Furthermore, many financial institutions can introduce ways for their users to profit from NFTs and convert their digital earnings into fiat.
2) New Era Customer Service Engagement
Banks can provide a comprehensive 24-hour banking experience in the metaverse for clients who still want to visit a bank office. The metaverse can enable bank users to have access to all of the bank’s services and have personalized interactions with bank employees. This will be a huge opportunity for banks.
— TransformHub (@HubTransform) June 27, 2022
Finally, banks can also profit by figuring out a way to enable people to access loans. This will include erecting terms and conditions for such offers. At the end of the day, having banks in the metaverse is a win-win situation.
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