Amidst the news of technology companies building land parcels and destinations that people would want to own in the metaverse, banks have had a sizeable share of metaverse mentions as well. Earlier this year, JP Morgan Chase became the first bank to open its office in the metaverse and other banks seem to have similar plans.
More importantly, after shunning cryptocurrencies for the most part of the last decade, banks are now open to allowing their customers to invest in them. While the metaverse has the potential for growth, what is making banks involve themselves so much? Here are four reasons for it.
Engage with customers in a meaningful way
The wave of developing apps to get work done swept through the banking industry as well. Earlier, when one needed to visit the bank for the smallest of tasks, banking apps have distanced the banks from their customers.
In the end, banking is still a business that requires people to interact and banks are hoping to reconnect with their customers in the digital world. Although putting a tiger in your digital lounge is hardly the way to attract customers, banks will definitely work on improving customer experiences in the metaverse and make them more meaningful.
Leverage their trust in the digital realm
The metaverse is still in its infancy, and if it does reach the potential that companies like Meta think it possesses, then it is going to be a chaotic world if not for trusted financial institutions.
If entertainment, play, and work are to happen in the metaverse, then virtual payment addresses alone will not work and there will be a need for financial institutions that can handle different cryptocurrencies and make them work seamlessly, just as we do today in the real world.
Leveraging the trust built over decades, banks can assume the role of payment facilitators, as well as help, recognize genuine businesses and individuals from the pool of fraudsters that will rush into the metaverse, once it is more popular.
Carry real-world services into the metaverse
If you were one of those people who predicted a real estate boom in the metaverse, then you probably wouldn't be surprised if JP Morgan or HSBC started lending services in the digital world.
Irrespective of the type of currency or platform used to build the metaverse, events in the digital world will reflect those of the real world. People will look to lease out land parcels, make rental agreements, and borrow money on credit in the metaverse, just as they do here. Banks can continue to offer similar services at first and then evolve them to suit the needs of the metaverse.
Big money opportunity
Every time a company or a brand reveals its intent to be part of this new digital world, the valuation of the metaverse bumps up a little. While JP Morgan called metaverse a trillion-dollar market earlier this year, recent estimates from the Citi Group peg its valuation at over $13 trillion.
As we have reported before, brands and companies are rushing to the metaverse as a result of FOMO (fear of missing out) and the whole metaverse bubble might just break sooner than one thinks.
However, if it does work out, it is a big-money opportunity for banks to not be a part of in the future. Smartly, banks have made small ticket expenditures for their metaverse presence, nothing like the top 5 spends we have seen in this space so far.
If it were to come crashing down, banks would go about their business in the real world with hardly a scratch on their books.