Banking as we know must change! The need for everything to be digitalized as a result of COVID forced the bank to change. And now the metaverse has arrived, thanks to new technology.
In the past, traditional banking has placed a lot of emphasis on its financial products and brand name to keep consumers. However, in the third decade of the twenty-first century, companies and people alike continue to adopt new technology. New technologies and the March 2020 COVID-19 epidemic have changed consumer behavior. Customers are increasingly doing business online. Traditional banks today face new challenges in client-interaction methods and product offerings. In light of these changed expectations, banks must focus on the metaverse, a new digital wave.
The phrase “metaverse,” combining “meta” with “universe,” is in development. Web 3.0l is a network of 3-D virtual worlds or virtual reality environments where users can interact with one other and the computer. Marty Resnick, VP Analyst at Gartner, forecasts that 25% of people will spend at least one hour every day in the metaverse for work, shopping, education, social networking, and/or entertainment by 2026.
Traditional banks can challenge challenger banks in the metaverse. They may focus on catching up with WhatsApp payments and embedded funding. Banks must also enable fiat money conversion into the metaverse’s cryptocurrency to attract people to shop there, especially when lending money.
Kumar Ghosh, director of software engineering at a Fortune 100 bank, forecasts metaverse financial activities. He promises frictionless, mobile, and cashless transactions. They can verify and onboard customers. Because of this, banks are encouraged to provide superior customer service. Banks that use cutting-edge technology like virtual reality (VR) to create a realistic and engaging customer experience will win.
An immersive consumer experience’s significance
Forward-thinking By utilizing the cloud and pooling resources like virtual call centers to handle client demands, banks may develop a strong, immersive customer experience within the metaverse area. While it may sound like something from science fiction, eventually banks will be able to design avatars for their employees and representatives in the metaverse. This will enable customers to have one-on-one conversations with bank representatives and access to all of the services offered by their financial institution in one location, in real time.
Customers will then benefit from a whole new experience, one that gives them a 360-degree perspective of their financial institution without ever requiring them to enter a real bank.
Examining the potential of NFT and cryptocurrencies
The new money in the metaverse will include cryptocurrencies, virtual credit cards, and non-fungible tokens (NFT). They are both essential to Web 3.0 and will coexist in this digitally advanced world. Banks can benefit from this by realizing that NFTs might be useful in wealth management, especially when launching mutual funds where investments appear to be promising.
According to Forbes, banks and financial institutions will devote more time and resources to facilitating cryptocurrency or financial models derived from blockchains as more people embrace the metaverse and cryptocurrencies, especially when they want to send money to others without the existing, traditional banking fees.
There are currently conversations taking place on how to manage cryptocurrencies in the metaverse as they are already making their way into widespread use (Paypal and Mastercard both use them). Publicis Sapient, however, contends that rather than waiting for regulation, banks should already embrace the metaverse economy. To do this, they should leverage trust and brand recognition (as Paypal and Mastercard are already doing); embrace metaverse payment platforms (such as Meta’s WhatsApp transactions); and begin integrating with VR and augmented reality (AR) platforms, particularly given that many people are already at ease using these things in sports or gaming.
The requirement to establish a reliable financial environment
Although the potential for banking in the metaverse is intriguing, banks should exercise some caution. When it comes to selecting a financial organization and making sure that their money and identity are protected, people’s top concern is trust. Building trust is essential in the banking metaverse.
A team sport, security has always been. When it comes to protection, no one vendor, item, or piece of technology can accomplish it alone. Although it took time to develop, the current culture of information sharing and collaboration in the security community is a major accomplishment.
Intruders always start their attacks with identity theft. When it comes to financial institutions, there are already a lot of sophisticated phishing schemes, and through time, consumers have been cautioned about what to look out for. Phishing scams may potentially take on entirely new worlds in the metaverse. No longer will someone get a phony email requesting that they change their password from what looks to be their financial institution. Instead, clients might find themselves in a virtual banking lobby interacting with a teller who has been hacked and is requesting personal information. Or a customer might be invited to a meeting in what turns out to be a malicious virtual conference room by someone pretending to be the bank’s CEO.
Therefore, banks and other institutions must devote time, effort, and resources to resolving these identity problems in the metaverse. It needs to come first. Financial institutions can achieve this by integrating password-less authentication into platforms and using multi-factor authentication (MFA). Banks can also benefit from recent developments in the multi-cloud space, where IT managers can control access to various cloud app experiences that their users depend on from a single console.
Preparing for the future
Even though there are still issues, banks can profit from the metaverse, the future. By doing this, banks will be able to compete on an equal footing with other, more modern institutions. Time has come. Banks have the chance to drastically alter their current business practices in order to attract and retain consumers in the upcoming metaverse.
Finally, especially at this early stage, financial institutions should embrace the upcoming metaverse as leaders rather than followers. They have the ideal chance to shape the course of metaverse finance on their terms.
