Satya Nadella, CEO of Microsoft said, ‘The metaverse is here and it’s not only transforming how we see the world, but how we participate in it.’ To understand metaverse banking, it is first important to make sense of the metaverse, which everyone interprets differently. Put simply, it is the internet experienced in 3D, where you can socialise, have fun and conduct business in the virtual world.
Now, there’s no denying that digital banking and FinTech have become widely prevalent in the financial ecosystem across the world today. In India, Covid-19 was the real accelerator, which forcefully propelled both businesses and individuals to adapt to digital ways of transacting with money. The Government of India has also backed initiatives in banking, with digital and neo banks emerging as dynamic solutions. While other demographics are hopping onto the digital-only bandwagon, it is Gen Z that has truly embraced this way of living life. The metaverse has the newest tool to take banking services to the next level for them.
As per a report earlier this year by Morgan Stanley and Goldman Sachs, metaverse is set to be an $8 trillion huge market, with banking playing a pivotal role. ‘Metaverse banking provides a virtual and immersive environment for banks to create customer experiences that are akin to walking into a branch and transacting,’ says banker Nethra Jagan. ‘They marry the best of the digital and the real world. Banks ideally need to tie up with FinTech companies offering this service, to maximise the customer experience. In India, the Union Bank of India opened a virtual lounge called Uni-verse last year, making it the first to foray into the metaverse. Since then, other banks like the PnB and Bank of Maharashtra have taken baby steps into this domain. But India’s first complete banking metaverse called Kiyaverse was launched by Kiya.ai this year.’
Adds Nethra, ‘With metaverse banking, a lot can be done. It’s different from digital banking because it is built on block chain movements. The pressing question is – doesn’t digital banking satisfy all your digital needs? Why do you need metaverse banking as well? It has a more customised approach to serving customers which also includes personalised product recommendations that can really help them make good financial decisions. Customers can also choose their own avatars and customise them. Rather than engaging with a chat bot or a flat screen, the avatar of a bank teller might be more exciting. Or even meeting your bank manager’s avatar in person using VR/MR.’
Not only visiting a bank, even making payments in the metaverse has taken on a whole new dimension. Bitcoin and other cryptocurrencies as well as other traditional currencies can be used to transact efficiently. In the future, tech and AI experts see scope for using the metaverse across all financial sectors – trading of stocks and shares, insurance, lending and so on.
Cyber security expert Dr Kamal Gandhi says, ‘One of the main advantages of using metaverse banking is the fact that you can visit your bank’s virtual branch without actually having to travel to it – you just have to pop on a pair of VR glasses and you can avoid all the bottlenecks too. However, this ease, convenience, and accessibility also has to come with enhanced security measures, as that is one of the most important aspects of banking. For instance, the customer in the VR may not be who they say they are – so robust security arrangements really need to be in place. Privacy and data protection is another major concern that needs to be plugged. Rather than replacing traditional banks, going forward the metaverse will actually enable them to enhance their services.’
According to an Accenture report, around 70 per cent of the banking community believes that metaverse is a game changer for the financial sector to gain a competitive advantage. Globally as well, banks have started adopting this technology. For instance, HSBC has aligned with the Sandbox Metaverse and JP Morgan Chase along with the Decentraland Metaverse to provide their customers with this experience. As far as the workforce goes, Bloomberg says that 90 per cent of the men in leadership roles in companies driving the metaverse are men; however the silver lining is that there are more women using the metaverse! This means that for the female customer, metaverse banking can also be a boon. Most women are not fully informed about everything a bank can offer them; metaverse banking can help reduce the gap in financial education and product knowledge. From the bank’s perspective as well, there is a considerable reduction of resources involved and employee training is made much easier.
‘Banks need to use analytics to keep tabs on how these services are being used,’ says Nethra. ‘This will play a big role in creating tailor-made programmes for their specific customer needs and also filling in the gaps using customer feedback. Some banks have even introduced are even testing holographic workstations. There are also other challenges such as banking regulations, which currently do not extend to the metaverse, as well as internal regulations of the metaverse.’
The metaverse banking industry is still in its infancy in terms of the development and application of technology. It also needs to work on proper governance and regulatory constraints. However, it isn’t going away anytime soon. As women in the financial ecosystem, it is important for us to make the most out of metaverse banking as and when it becomes accessible to us!