Virtual Assets, Real Opportunities: Financial Institutions’ Metaverse Exploration
The metaverse is a work in progress, a realm of limitless possibilities where experimentation reigns supreme and competing platforms seek to establish dominance. Financial institutions have been equally delving into this exciting new realm, collaborating with tech companies to explore potential use cases and refine the platforms into veritable conduits of economic potential.
As technology continues to transform the financial landscape, empowering customers with new ways to transfer, invest, and save funds, financial services providers are presented with a unique opportunity to cultivate a fresh crop of loyal, long-term customers while continuing to satisfy existing ones. With virtual spaces becoming increasingly integral to our daily lives, several brands have been seizing the momentous occasion to explore the potential applications and leverage the capabilities to offer innovative financial solutions to their customers.
Amidst a tumultuous year for the cryptocurrency and blockchain world in 2022, the metaverse has witnessed vigorous recognition, showcasing its resilience and potential. Despite its progress, the current phase is acknowledged as the pre-metaverse era. It is anticipated that a more comprehensive definition of the metaverse will emerge in the coming years as it continues to evolve and mature.
To anticipate what lies ahead for financial players in the evolving metaverse world, it’s crucial to examine the influential developments, projects, and events spearheaded by financial institutions that have paved the way for growth. After delving into the intricacies of Brands Becoming Versed with the Metaverse and Banks Compounding their Interest in this Digital Realm, we now look at some of the bold strides financial firms took as they ventured into the uncharted territories of the metaverse in 2022.
FIs get Meta-curious: Q1 Highlights
At the start of 2022, financial institutions jumped into the metaverse frenzy with gusto, making their presence known. Some traditional establishments also jumped on the web3 bandwagon, despite their prior aversion to decentralisation.
DGB Financial Group made a virtual power move in January 2022 by acquiring the virtual land of DGB Daegu Bank’s second headquarters on Earth 2. Shortly thereafter, in February, J.P. Morgan was seen dipping its toe as it tested the metaverse waters via the launch of its Onyx Lounge in Decentraland. HSBC followed suit a month later, purchasing a virtual land in The Sandbox to connect with gaming, e-sports, and sports enthusiasts.
The events of that year were only the opening act, setting the stage for an influx of moves and ventures that unlocked a new trail for experimentation for FIs to take a deep dive into.
Venturing in the Metaverse Odyssey: Q2 Highlights
The second quarter of 2022 was rather eventful for the industry, with multiple FIs harnessing the potential of metaverse to create communities, promote sustainability, facilitate ESG efforts, and deliver unique experiences.
NatWest entered the metaverse with a purpose, launching the ‘Portraits of Success’ virtual event series that combined innovation with compelling storytelling to connect with audiences and challenge stereotypes around female entrepreneurship. American Express and Mastercard made moves to expand their real-world services into the digital realm by filing several patent and trademark applications, respectively. As the quarter drew to a close, US digital bank Quontic set up an outpost in Decentraland to connect with customers, provide education, and in due course, offer banking services as the virtual world evolves.
Metaverse Expands Beyond Borders: Q3 Highlights
The metaverse movement went global in the third quarter of 2022, with emerging markets actively embracing the concept and fueling its adoption and expansion, especially in The Global South. Capitalising on the growing interest in the metaverse, many took to offering basic banking services, promoting investments, and fostering collaborative opportunities with other partners, all the while aiming to build a customer base among the tech-savvy population.
While Union Bank of India launched Metaverse Virtual Lounge ‘Uni-verse’ to host the bank’s product information and videos in the initial phase, South-Korea based KEB Hana Bank joined forces with The Sandbox to launch a new type of event marketing and expand global metaverse business in the banking industry. Singaporean banking conglomerate DBS also added to The Sandbox’s partnership portfolio, as it acquired a virtual land to push forward with a vital and wholesome message of sustainability.
Retaining the Metaverse Momentum: Q4 Highlights
With 2022 nearing its end, the metaverse emerged as a playground for the possibilities of replicating everyday human living, playing, and working experiences in an augmented reality setting. However, with a larger digital presence came the need for robust cybersecurity measures to fend off bad actors seeking to exploit vulnerabilities. As the metaverse gained popularity, banks had to work towards ensuring compliance with privacy regulations and data laws across all jurisdictions they operate.
J.P. Morgan continued expanding its presence in the metaverse with the launch of a new digital identity feature, empowering users to choose identity credentials they want to share throughout their interactions online. In Dubai, Commercial Bank International tapped into the creative possibilities of the metaverse by conducting formal job interviews in their virtual location, ultimately leading to the hiring of a new Emirati employee. Philippines-based UOB forayed into the space with its own differentiated virtual experience via the launch of SkyArtverse – a virtual art gallery built within Decentraland – to broaden engagement with both Southeast Asian artists and audiences. The bank continues to see potential in blockchain technology in the first quarter of 2023.
From Pixels to Policies: Insurance Firms in Metaverse
The insurance industry has been longing for a revolution, as most of its processes have been tied to paper-based practices. In the last few years, insurance providers have started to use modern technologies to improve their operations, enhance customer experience, and provide better products and services. In 2023, several insurance brands took a step further in embracing emerging technologies like blockchain, metaverse, and NFTs to elevate their business strategies to the next level.
AXA France made its metaverse debut with its ‘Axadia’ meta-gaming experience in The Sandbox, an initiative that allows the general public to discover the company’s mission, values, recruitment, and social commitments, along with additional incentives to participate.
Major banks and tech firms in Japan also banded together on a new open metaverse infrastructure called Ryugukoku, a project that will enable interoperability between, and collaboration among, different metaverse platforms. India’s Max Life Insurance is currently testing the waters with the idea of initially offering services such as facilities, roundups, and webcasts, planning to test the concept internally before making it available to customers.
While financial firms prioritise customer engagement in the current landscape, some institutions continue to utilise their outposts to educate customers on financial literacy and product offerings, promoting financial knowledge and readiness for the impending hybrid digital-physical world. Comprehending the different metaverse concepts in development would account for the next set of steps, with financial institutions having to keep a close eye on the crucial indicators that will determine which virtual world gains more popularity than others. Where some serve to capitative their audience, others look to showcase their content. By strategically navigating this immersive landscape, financial institutions can help unveil how the metaverse can benefit across various touchpoints – both in the short and long term.