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Is The Metaverse Transforming Financial Services?

The metaverse's impact on the financial sector is determined by the evolution of the underlying technology, particularly Web 3.0, and the extent to which platforms are adopted as part of our daily interactions.

According to experts at finance conferences and events in the USA, financial services companies have joined peers across industries to explore the potential opportunity in the metaverse. However, few are yet to attempt this at scale.

How Companies Currently Use Metaverse

Financial institutions have been experimenting with Web 3.0-enabled metaverse venues and the more traditional Web 2.0 metaverse. Financial services companies are using Web 2.0 technology for employee training, creating virtual "financial towns," telecommuting centers and interaction spaces, and offering virtual investment advisory services. While these applications are pretty mature, their impact on the primary business model in financial services has been minimal.

As will be discussed at upcoming finance conferences in Vegas, more creative models of engagement are emerging in the Web 3.0-enabled metaverse. As its function shifts from primarily consumer entertainment to more commercial applications—and niche social interactions to become a social network—opportunities will only grow, as illustrated by the following examples:

  • Marketing: Institutions may establish digital branches in the metaverse to strengthen their brand and credibility with users, demonstrate their ability to innovate, and even provide client interactions in a hybrid fashion with more traditional digital or physical channels.

  • Infrastructure: Financial institutions that are traditionally set up, like banks, for instance, can help us build bridges over this widening gap between what we do now and what we could do if we all had the knowledge to take control of our data.

  • Emerging products & services: As cyber insurance for businesses and similar services become more common, insurers and cybersecurity firms are well-positioned to capture a portion of this emerging value pool, and prevent fraud and scams, possibly through novel collaboration and models.

What Could Happen Next?

As the metaverse gains a larger share of daily human interactions, digital versions of more sophisticated banking services may emerge to serve these users. Here are some examples, as suggested at the Money 2.0 Conference:

  • bank-like services embedded in native metaverse venues for wallet owners, such as multicurrency cash management.
  • back-end financial services such as virtual real-estate mortgage origination and warehousing.
  • investment funds and services for metaverse projects, such as metaverse-specific investment funds.
  • improvements to customer engagement, such as gamified credit education and loyalty programs tailored specifically for each individual.
  • financializing everything, as more digital assets with utility in a metaverse context, such as being used as collateral for loans, are created.

According to experts who will be speaking at finance conferences and events in the USA, the adoption of the metaverse will determine the growth of these use cases. Furthermore, the value and convenience of financial services in the metaverse must outweigh the current utility of online or in-person servicing. If engagement in the metaverse gains traction, many financial service companies will have to choose between investing and entering at scale, establishing a minimal position, or doing nothing for the time being.

The degree to which a company is willing to invest in the future of virtual reality; its ability to come up with an appropriate market position; how many people can enter or exit this sphere at will, and how many people are enticed by it- all these factors weigh heavily when deciding what investment could go into developing a comprehensive virtual reality strategy.

While widespread metaverse adoption and the development of significant revenue pools in financial services may take time, many companies may decide that early investment is an appealing strategic hedge, particularly given the increasing integration with digitally native assets. To learn more about this arena, do attend our upcoming finance conference in Vegas, the Money 2.0 Conference, where finance professionals will dive deep into the role of the metaverse in the financial services industry.

09/30/2022 - 13:12
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Lakshay Mohanpuriya
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Lakshay has always been drawn to the world of finance. His fascination for it led him to join the organizing committee for the Money 2.0 Conference - an annual conference exploring FinTech trends, showing how to best manage one's money, identifying scams/fraud and fake investments spam, as well as highlighting ways to stay safe.