While it may no longer be the buzzword that tech people used to talk about, the “metaverse” is starting to catch the attention of financial institutions.
With a young, tech-savvy and financially unfamiliar user base, the Metaverse offers banks a unique opportunity to build relationships with digital natives and fintech-friendly consumers. It is also important for banks to be able to utilize such talent for future employment.
Investing in the metaverse
Large traditional finance (TradFi) institutions from various regions of the world have begun to set up shop in the Metaverse. JPMorgan Chase entered Decentraland under the brand name Onyx. According to the company, Onyx is a “blockchain-based platform for wholesale payment transactions.”
Related Article: JP Morgan Expands into Metaverse — Opening Store in Decentraland, Releases Report
Last March, HSBC announced it would purchase The Sandbox virtual land to engage with customers and offer new experiences in the metaverse.
In addition, KB Kookmin Bank, one of the four major megabanks in South Korea, and DBS Bank in Singapore have also entered the Metaverse and started offering various services.
KB Kookmin Bank independently developed metaverse-based financial services and also provides one-to-one customer service. Employee training and financial education for young people are also planned.
DBS Bank has purchased a large piece of virtual land on The Sandbox to develop interactive experiences aimed at promoting a more sustainable world. The bank said its partnership with The Sandbox is part of its effort to explore the potential of Web3 and spread awareness of important ESG (environmental, social and governance) issues.
In Canada, Toronto-Dominion Bank (TD) and Royal Bank of Canada (RBC) are conducting Metaverse pilot programs to help them understand the technology and effectively serve their customers. TD conducted a pilot program from January to April this year, and also worked on customer experience.
Compatible with Web3 financial services
Banks’ efforts in the metaverse are not limited to the purchase of virtual land as described above.
Banks are preparing their financial advisors and wealth managers for Web3-based financial products. This includes Metaverse ETFs and Metaverse Index products, driven by the rising market capitalization of Metaverse tokens and the shift to cryptocurrency investments by millennials, Gen X and Gen Z customers.
Looking at the report “Wealth Management Top Trends 2023” released by Capgemini, a consulting firm, High-Net-Worth Individuals (HNWIs) are defined as individuals with investable assets of $1 million or more. ) have invested in digital assets, and more than 9 in 10 HNWIs under the age of 40 choose crypto as their “preferred investment asset class.”
The metaverse’s impact on the financial services sector represents the next evolution of banking and capital markets. Many in the financial world believe that a broader education about crypto assets is needed, not just Bitcoin (BTC) and Ethereum (ETH), which are the most influential crypto assets.
And with more and more crypto-savvy banks, it’s becoming more important to see what the metaverse can do and how much it’s worth.
｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Original: Banks Have Come to the Metaverse