Home Banking News How Metaverse is going to revolutionise the banking industry?

How Metaverse is going to revolutionise the banking industry?

by Shatakshi Gupta

People no longer have to wait until lunchtime to have their banking questions answered, nor do they have to visit the bank multiple times to get loan approvals. Since the inception of digital banking, the banking industry has grown by leaps and bounds. Most banks used human capital from the time they were invented until the late twentieth century. The technological revolution altered the entire game, allowing the banking industry to become highly process-driven.

Credit disbursements are now completed in an astonishing two-minute time frame, thanks to digitization. However, the new kid on the block is Metaverse, which has captured the attention of various industries, including the banking sector. People have been reluctant to leave their homes since the pandemic, and the metaverse takes advantage of this opportunity.

Imagine depositing money into a bank without having to physically visit the branch, and having avatars such as the bank manager, your relationship manager, and other bank employees guide, interact, and engage with you in the virtual world while you sit on your couch and have an immersive experience without moving an inch! Doesn’t that sound intriguing?

How can the Metaverse be used to address consumer pain points?

With the help of the metaverse, banks that do not currently operate 24/7 due to higher operating costs can set up virtual branches and allow customers to access their services at any time, any day, and from any location. Hitesh Sachdev, Head of Startups and Innovation at ICICI Bank, stated at the ETBFSI Converge that rental agreements and mortgages can also be signed in the virtual space.

What are the applications of Metaverse in banking sector?

Aside from providing customers with ubiquitous access, there are several other advantages to embracing this new technology. Accenture’s report beautifully summarises some of the key opportunities for banks to capitalise on metaverse.

  • Displaying real estate projects while sitting at home.
  • Developing short-term engagement with customers.
  • Foreign banks can provide experience to ultra-high-net-worth individuals.
  • Allowing customers to check balances, pay bills, transfer funds, and transact through AR/VR channels.
  • Taking advantage of employee experience by providing immersive learning in the safety of fully simulated customer environments
  • Customer onboarding is made easier by strengthening community bonds among new employees and corporate start-ups.
  • The presence of virtual branches provides clients seeking mortgages or other sophisticated products with personalised service.
  • Providing convenient remote advice, as well as annual portfolio reviews, financial planning sessions, and mortgage advice delivery
  • When presenting new investment products to prospective clients, encourage collaboration and real-time analysis.
  • Providing secure wallet functionality and payment rails for metaverse products, services, and economies.
  • Launch of digital asset issuance by creating digital assets for customers’ new and existing products.
  • By virtualizing familiar brand interactions such as checking refinancing rates and branch placement, marketing and brand extension can be promoted.
  • Secure, insure, and lend against digital assets, NFTS, virtual real estate, and other third-party assets using digital asset services.
  • Making use of holistic data derived from digital asset usage and metaverse customer activities.

Why are banks interested in the metaverse?

The metaverse is expected to be a $5 trillion market by 2030, with bankers believing that image is everything. Adopting the metaverse demonstrates that banks are technologically savvy and are paving the way for a high-tech environment.

However, Hitesh believes that success in the metaverse is primarily dependent on adoption, and that having the right target audience is critical. He summarises it as “right audience, right use cases, and right customer segment” forming the holy trinity of striking the metaverse’s right chord.

For example, HSBC Bank has purchased sandbox land to engage with online sports fans and e-sports enthusiasts, and JP Morgan Chase has established a global banking giant.

Kiya.ai launched Kiyaverse, India’s first banking meraverse application. A number of public and private sector banks have expressed interest, and the Union Bank of India has even launched its own digital banking Metaverse lounge called ‘Uni-Verse’.

Customers can use this app to visit a bank without actually going to a bank, choose digital avatars for themselves, enter the banking lounge and access banking services, and finally, get information on social security loans and other important information. Transactions in this space, however, are prohibited due to regulatory and security concerns.

What are the Challenges?

Read more: What are the benefits and risks of having multiple credit cards?

 According to Hitesh, data privacy remains a huge risk, and building trust is critical because transactions must remain safe and secure. He goes on to say that authentication layers must be built. Because it is dependent on a third party, interoperability must be maintained. Finally, he cautions that the return on investment will not be viable right now.

In a nutshell, while the metaverse provides numerous opportunities for the banking sector to thrive, the challenges surrounding the cost matrix, investment returns, and data security must be addressed. Only time will tell if this technology is worth the investment.

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