Banking in a metaverse era

NEW DELHI: The metaverse is quickly encroaching on all facets of our existence, from social networking to online concerts to working, playing, buying, and gaming.

The metaverse banking industry seems to be the next buzzword with the potential to revolutionise fintech.

Morgan Stanley and Goldman Sachs predict the metaverse is expected to grow to over $8 trillion in the near future. And despite the fact that metaverse is still in its infancy, there is little doubt that it has begun to spark interest in the Banking and Financial Services sector, which has been experiencing tangible benefits from cryptocurrencies and non-fungible tokens (NFTs).

A creator and virtual economy has emerged as a result of the adoption of NFTs, crypto, and central bank digital currencies (CBDC), all made possible by blockchain technology and Web 3.

This economy has unlocked the potential for new assets like digital art, virtual property, and play-to-earn (P2E) games.

A new virtual economy has emerged that is growing more decentralised, inclusive, and transparent thanks to the metaverse, NFTs, and decentralised finance (DeFi), which provides financial instruments without relying on intermediaries by using smart contracts on a blockchain.

So what is the metaverse? It’s the fusion of augmented reality, virtual reality, mixed reality , extended reality, Web3, artificial intelligence, 5G, Internet of Things, cloud,edge computing, blockchain, and other technologies.

Essentially, a digital economy with an immersive experience.

And metaverse banking? Well, it can be defined as a variety of banking services that users can access within a metaverse.

It can be viewed as an all-encompassing word for financial operations that enable users to conduct transactions in the metaverse and has the potential for the industry to see the next technology revolution after online banking, mobile banking, and virtual branches.

Banking is one of the sectors where the metaverse has experienced major growth of late. The sector is poised for another major shift as virtual banking experiences take centre stage.

Let’s consider some use cases of the metaverse in the banking sector: JP Morgan has established an Onyx lounge in the metaverse where they enable international transfers, the generation of financial assets, storage, and trading.

HSBC has made an investment in the metaverse that will be created for interacting with gamers and esports fans.

Standard Chartered has also purchased a metaverse property which it intends to utilise for metaverse experimentation and the development of new services for customers.

Siam Commercial Bank is the first to establish its corporate office in the metaverse where they have made a provision for gatherings and information exchange where businesses can interact while working on joint projects and through the NFT marketplace, it aids in the promotion of regional artists.

Union Bank of India too has taken a few tiny steps to venture into the metaverse.

Even though these are just a few of the top brands in the metaverse banking industry, as we talk about this transformation, more banks are entering the market.

But what do banks gain from funding metaverse initiatives? For that we would need to come back next week and explore more, for these are exciting times and even traditional banks are all eyeing the met space…

(To be continued...)