Why the banking industry needs to embrace the metaverse

Historically, traditional banking has relied heavily on brand reputation and financial products to build customer loyalty. However, businesses and individuals continue to embrace new technologies in the third decade of the 21stcentury.

Along with new technologies and the onset of the COVID-19 pandemic in March 2020, there has been a marked shift in customer behavior. Customers are now more inclined to operate remotely and in the digital world. As a result, traditional banks are facing new challenges both in terms of their methods of interacting with customers and the products they offer. With these new expectations, banks will need to embrace and focus on the new digital wave known as the metaverse.

The metaverse (combining the words ‘meta’ and ‘universe’), is currently in the development phase. Known as Web 3.0l, it is defined as a network of 3D virtual worlds or virtual reality space where users can interact with a computer-generated environment as well as other users. According to Gartner analyst Marty Resnick, by 2026, 25% of people will spend at least one hour a day in the metaverse for work, shopping, education, social media, and/or entertainment.

In banking, the metaverse offers an excellent opportunity for traditional banks to compete with challenger banks. They can focus on recovering lost ground resulting from a lag in innovations such as WhatsApp payments, as well as integrated finance. Banks also need to innovate in ways that enable their customers to spend time in the metaverse and make purchasing decisions, such as enabling the conversion of fiat currency into metaverse cryptocurrency, especially when it comes to the metaverse. acts to grant loans to customers.

Kumar Ghosh, director of software engineering at a Fortune 100 bank, believes that in the future, several financial transactions will occur in the metaverse. “These operations” he says, “will be mobile, frictionless, cashless. They can even onboard a customer or verify their identity. It’s one of the reasons why banks are called upon to create an unparalleled customer experience. Banks that can use advanced technologies like Virtual Reality (VR) to create a realistic and immersive environment for their customers will be able to deliver unbeatable service and win the race.

The importance of an immersive customer experience

Forward-thinking banks can create a powerful and immersive customer experience in the metaverse space by using the cloud and sharing resources such as virtual call centers to respond to customer requests. While it may sound like science fiction, eventually banks will be able to create avatar representatives and officials in the metaverse, allowing customers to have one-to-one conversations with banking agents and access one place, in real time, to all their financial institution services.

This, in turn, will provide a whole new experience for customers: giving them a 360-degree view of their financial institution without ever having to physically set foot in a physical bank.

Exploring NFT and Cryptocurrency Opportunities

Cryptocurrencies, virtual credit cards and non-fungible tokens (NFT), will be the new currency of the metaverse. They are an integral part of Web 3.0 and will go hand in hand in this new virtual world. Banks will be able to take advantage of this by recognizing that NFTs are a potential asset in wealth management, especially in launching mutual funds where investments look promising.

According to Forbes, as more people embrace the metaverse and cryptocurrencies, banks and financial institutions will invest time and energy in facilitating cryptocurrency or blockchain-derived financial models, by especially when people will want to send money to others without the current, traditional bank fees that exist.

Since cryptocurrencies are already in public use (Paypal and Mastercard already use them), discussions are already underway on how to regulate cryptocurrency in the metaverse. However, Publicis Sapient, argues that rather than waiting for regulation, banks should already embrace the metaverse economy, and they should do so by leveraging trust and brand recognition (as Paypal and MasterCard); adopt metaverse payment platforms (such as Meta’s WhatsApp transactions); and begin to integrate with virtual and augmented reality (AR) platforms, especially since many people are already comfortable using these elements in sports or gaming environments.

The need to create a banking environment of trust

While the banking possibilities in the metaverse are exciting, banks should still proceed with some caution. Trust is the number one issue people look for when it comes to both choosing their financial institution and ensuring their funds and identity are safe. Creating trust in the banking metaverse is crucial.

Safety has always been a team sport. No vendor, product or technology can go it alone when it comes to protection. The culture of information sharing and collaboration in the security community that exists today is a monumental achievement, but it did not happen overnight.

Identity theft is always where intruders strike first. There are already many sophisticated phishing scams when it comes to financial institutions, and over time people have been warned about what to look out for. In the metaverse, phishing scams can potentially take on whole new areas. No longer will anyone receive fake emails that appear to be from their financial institution asking them to reset their password. Instead, customers might find themselves talking with a hijacked avatar of a teller in their virtual banking lobby asking for their personal information. Or someone posing as the CEO of the bank could invite a client to a meeting in what turns out to be a malicious virtual conference room.

Therefore, banks, along with other institutions, must invest time, energy, and manpower to resolve these identity issues in the metaverse. It must have absolute priority. Constructive steps that financial institutions can take to achieve this include creating multi-factor authentication (MFA) and passwordless authentication built into platforms. Banks can also leverage recent innovations in the multi-cloud space, where IT administrators can use a single console to manage access to multiple cloud application experiences that their users rely on.

Preparing for the future

Although there are still problems to solve, the metaverse is the future, and banks can really benefit from this emerging technological innovation by getting involved on the ground floor. This will allow banks to compete on an equal footing with other more forward-thinking institutions. It is now. The coming metaverse is an opportunity for banks to radically change the way they do business, and both retain and recruit new customers.

Finally, financial institutions should embrace the coming metaverse as leaders rather than followers, especially at this early stage. This is the perfect opportunity for them to create the future of metaverse banking on their own terms.

About the Author: Poonam Garg is an engineering leader at a Fortune 10 Fintech company, who has over 12 years of IT experience. His technical skills include several scripting languages, programming languages, web technologies, Java frameworks, relational databases, operating systems, open source tools, cloud technology, security tools, engineering architecture and more.

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