What is Metaverse?

As a broad category, technologies that comprise the metaverse include virtual reality, which is characterized by persistent virtual worlds that persist even when the user is not playing or interacting, as well as augmented reality, which is the fusion of the digital world and the physical world. It does not necessarily mean that those spaces can only be accessed via VR or AR. Virtual world-like aspects of the multimedia online game Fortnite that can be accessed through PCs, game consoles, and even phones, could be metaversal.

In addition, it refers to a digital economy in which users can create, buy and sell products. It is interoperable, making it possible to transfer virtual items like clothing and cars from one platform to another. Most platforms now have virtual identities, avatars, and inventories that are tied to a particular platform, but with metaverse, you can create a persona that you can take anywhere easily and seamlessly in the virtual world, just like copying a profile picture between social media platforms.

What is the metaverse made up of?

The highly renowned and influential venture capitalist Matthew Ball who has written extensively on the subject of metaverse describes it as ‘a sort of successor state to the mobile internet’. Despite the fact that there are many elements of the metaverse in the virtual world of the internet and technologies of the past, there are a few essential differences between them and the metaverse as envisioned by leading-edge technologists. In particular, there are 3 aspects that serve as a demarcation point between contemporary virtual worlds that exist before the advent of the metaverse - such as virtual social networks, and online gaming - and what they expect going forward. 

A fully-operational economy: This is one of the core differentiators between the indigenous virtual worlds and simulations and the metaverse. Additionally, it illustrates how fundamental the blockchain concept will be to the metaverse. Users will be able to engage in value-creating activities in the metaverse and be provided with seamless ways to transfer or exchange value with others.

Open and decentralized: The metaverse will not be a platform with control of all the data and activity with one centralized platform, but rather a space where no one entity has total control over metaverse participant data and activities. The metaverse will be more like the internet of the early Google years than the platformed internet of today, where social media platforms and search engines mainly Google have complete and uninhibited access to users' data and adapts the experience to fit their historical preferences and patterns, thus removing objectivity from data provided to users.

Interoperability: The goal of metaverse is to create a 3D virtual environment where content, such as an avatar of a user, can move seamlessly from one simulated environment to another. As of now, what happens in one virtual environment tends to remain there. With the metaverse, participants can move from one simulated environment to another, taking their experiences and data along with them.

Impact on Fintech and Banking

As you read this, the internet is undergoing a major transformation. It has already revolutionized banking. Here's how we anticipate the metaverse will impact how banks engage, enable, and innovate:

Providing customers with more meaningful, seamless experiences

Customers' interactions will probably be the most obvious example where the metaverse will have an irreversible effect on banking. Many banks already offer video conferencing services and have installed ITMs or interactive teller machines in their branch lobbies or vestibules that offer an ATM-like interface with a video screen that offers real-time access to a human representative, often located centrally, offering convenience and socially distanced human interaction. Because of this, it has seen unprecedented growth during the pandemic. 

With the phenomenal rise in the deployment of interactive teller machines spurred by the incredible shift to zoom meetings and teleconferencing during the pandemic, customers have grown more comfortable and familiar with interacting on video screens, so the next logical step in digital customer experience would be serving customers in the virtual realm.

Also, the Metaverse provides new opportunities to engage with new audiences, especially the NFT-savvy youth. To reach this audience, banks must find new ways to connect. Kids from the 1990s remember getting their bank books stamped at a branch with their parents. What does metaverse mean to the next generation?

It may mean that bank customers can visit virtual branches for high-touch customer service, take a virtual house tour with a mortgage worker in real-time, discuss retirement plans in the shared virtual world with an advisor's avatar, attend a bank-sponsored investor event, or be part of a community program while sipping coffee at home.   

JP Morgan is the latest bank to enter the mesmerizing virtual world of the metaverse. In the blockchain-based world named Decentraland, the company has launched an "Onyx lounge" - a virtual lounge.

The Decentraland website is a browser-based 3D virtual world in which users can buy plots of land in the form of NFTs and make purchases using cryptocurrency supported by the Ethereum blockchain and interact with other users through 3D avatars.

Kookmin Bank, a major Korean bank, has created a virtual town on the Metaverse platform. The virtual town is comprised of three spaces. 

• Financial and Business Center
• Telecommuting Center
• Playground 

Financial and business centers have branches, recruitment and public relations booths, auditoriums, and social spaces. There is also a telecommuting center that facilitates communication between telecommuters and office workers, and a playground consisting of "resting areas such as parks."

To facilitate customer demand for contact anytime, the bank is already providing state-of-the-art services like chatbots, and are developing sophisticated solutions to provide the whole gamut of banking services, especially in the VR environment. This is a win-win situation for both banks and customers as customers can gain access to the full spectrum of banking services anywhere and anytime and banks can save humongous amounts of money by not having to build and manage physical spaces. 

Providing immersive training to the employees

A high level of employee engagement is required to deliver superior customer service. As customer service progresses to the next level, employee training must also evolve. Virtual reality and augmented reality contribute not only to a relevant positive change in the customer experience but also to the way banks train their staff to implement those changes.

The growing influence of remote working conditions catalyzed by COVID-19, VR, and AR has enabled colleagues to collaborate effectively and efficiently without having to share a workspace by using features such as chat, annotation, and screen-sharing. They are particularly useful for the analysis of financial risks through data visualization. In Metaverse's application, the crown jewel is the ability to bring greater convenience to clients and professionals alike, with VR and AR being implemented in client-facing environments.

Bank of America is leveraging metaverse concepts and technologies in order to train staff across all the 4300 centers worldwide encompassing 50000 employees. They have implemented AI-powered conversation simulators that facilitate enhanced role-playing opportunities, as well as platform simulators that facilitate employees to train in a simulated real-world environment on the systems, software, and technical tools they use every day.

Developing new products and services and creating new markets

Since the metaverse will have its own economy, we can expect to see a proliferation of businesses dedicated to providing financial services to the inhabitants of the metaverse. In such a world, digital identity providers and authentication service providers will play a significant role, as will financial data management companies and infrastructure service providers whose jobs will be to facilitate value transfer in the virtual environment. Blockchain and digital asset companies will be critical to building the metaverse, but companies that build virtual assistants and AI-powered agents will also have plenty to do.

The metaverse is bursting with unprecedented opportunities for banks to insure or lend using cryptocurrency, NFT, or virtual property as collateral. To extend their brands, banks will need to decide on their role and how to leverage these untapped opportunities.

Banking companies will be able to virtualize customer interactions such as cash withdrawals from virtual ATMs, branch storefronts, and real sponsorships of virtual events. If we extend this to the art of the possible, you might walk out of an appointment with your avatar advisor to an ATM, give your PIN to get money in your virtual wallet and walk next door to buy a virtual handbag.

As consumers create spaces across metaverse worlds, banks should not simply step in and monetize. Instead, they should work to proactively build communities. Take a cue from outside the industry. Consider Nike's recent acquisition of NFT design shop RTFKT as a means of increasing its credibility and speaking authentically to the community. Proceed with caution, because moving in the wrong direction could quickly break trust.

Conclusion

We believe now is the most exciting time to be an entrepreneur in our financial history, as the Metaverse, Blockchain, and Cryptocurrency technologies we are developing and deploying will change the financial landscape forever.

If you want to understand this in-dept then write to us at connect@karza.in