The first bank to enter the metaverse with much fanfare was JP Morgan earlier this year. The US investment giant took a large plot in Decentraland and boasts a prowling tiger as a feature in its Onyx Lounge.
Since then, South Korea’s Kookmin Bank has opened up its customer services options by providing one-to-one consultations in the metaverse.
HSBC then followed, opening a branch in the established Sandbox region of the metaverse, while the UK-based payments fintech Sokin recently announced its imminent foray into the augmented reality platform.
Launched in 2021 Sokin operates as a next generation payments provider rather than a bank, but the fintech is set to enable full ecommerce payments for the first time in the metaverse, allowing brands and businesses to grow from its physical store into the virtual world.
Currently no single metaverse world exists where consumers can shop their favourite brands, however, Sokin will launch its own metaverse community designed to process full ecommerce transactions.
According to reports, Sokin’s metaverse world will host a 3D community of brands and retailers – from sporting to fashion and beyond – and allow consumers to meet, communicate, transact, invest, and purchase in one all-encompassing ecosystem and virtual economy. Consumers will make purchases through Sokin’s accessible peer-to-peer mobile app within the metaverse.
“Sokin’s metaverse world will host different brands and businesses for visitors to access, for example, a football club, entertainment or fashion brand”, Vroon Modgill, founder and CEO at Sokin, who already partner with a number of global football clubs, explains.
He says, “We’ve seen campaigns by retailers in which an avatar models an item of clothing but then the experience abruptly stops there. So, we close the sales loop by ensuring a purchase can be made directly within the metaverse experience - this is never before seen innovation we are spearheading as we further bridge the gap between the metaverse and the physical world.
New virtual worlds attracting fintechs to the metaverse
Now, digital banks are developing their own worlds that will support financial services in the metaverse. Imagin is a digital services and lifestyle platform backed by CaixaBank that will be entering the metaverse by way of imaginLAND.
The project will enable the platform to launch and run initiatives in the virtual reality universe and will be available to its entire community of users. The initiative will offer immersive experiences through imaginLAND to the more than 3.7 million imagin users, who will be able to enjoy imagin's content in the metaverse. By creating imaginLAND, imagin becomes the first European fintech company with an active presence in the virtual world.
The gamification of financial services in the metaverse
However, many experts have expressed their surprise at the way fintechs are embracing the metaverse. While alternative realities in the gaming world are completely understood, many have questioned why an industry that is not entertainment based, would invest so much in establishing a presence in the metaverse.
Furthermore, there is the expectation versus reality aspect. The metaverse is far from polished - and falls short significantly when it comes to the aesthetics. Instead of a slick and polished luxurious virtual world that most current games offer, the metaverse in its current form is simplistic and unsophisticated. However, this will of course change in the not too distant future - which is the what fintechs are banking on.
David Urbano, Chief Marketing Officer at imagin, says the trend comes down to potential opportunity. “The metaverse concept is in its nascent stages and therefore it is difficult to know what the short-term impact, from a banking business point of view, will be. We truly believe that it marks an evolution of digitisation as we know it, and that in the future, it will become a significant business opportunity.”
He continues, “What is clear is that it is here to stay, and it will continue to rapidly add more activity and users. It is for this reason that we have decided to enter the key metaverses.”
Other industry voices point to four main aspects that attract banks and fintechs to the metaverse. They are;
- Early-stage opportunism - If businesses had known just how successful the internet was going to be in the late 90’s, most of them would have adopted it sooner.
- Branding opportunities - Just as fintechs such as Sokin are gathering up football teams to spread brand awareness in a new demographic, so banks and fintechs are doing the same thing with the metaverse. It’s not very likely that people will enter the metaverse to visit their bank because all processes are easily carried out online anyway, and visiting a bank - even a virtual one, just isn’t the height of fun. But by entering the metaverse, these institutions stay relevant and put their stamp on worlds that show growth potential, such as HSBC in Sandbox and JP Morgan in Decentraland, they will be placed at the heart of areas that do get a lot of virtual footfall.
- A new dimension to customer servicing - Bricks and mortar banks are dying out because online banking services are so good. But many institutions want to still be able to offer what they consider to be face to face human services and the metaverse offers that possibility.
- A haven for digital currencies - crypto is king in the land of the virtual - and many businesses in the metaverse are already trading with a number of different currencies. This trend looks set to continue.
Urbano says that only exploration of the augmented reality world will reveal its true capabilities, “Today, a vast amount of existing metaverses are in the beta phase. At this time, our role in the metaverse is one of exploration and learning, to be able to understand all the services that could be offered in the future.”
But he is fully optimistic about the future of the space and believes it will open up a raft of new and as yet unpredicted opportunities.
“The success of a financial institution in this new environment will rely on its ability to effectively offer its services and/or products in this new virtual world. We believe that services where we can mediate payments or financing products, could prove to be successful if adapted correctly. If the metaverse ends up becoming the meeting place for our potential clients, it could even become a new onboarding channel.”