Demystifying the metaverse for banks, part 1

It seems inevitable that, sooner or later, the metaverse is going to become another channel through which banks can engage both customers and employees. The reasons for this are twofold: 1) not only is there a lot of media hype about the metaverse, but 2) there also is significant investment from organizations in developing this new experience layer of Web3.

A major driver for investing in the metaverse is advertising; advertising in the virtual world can be measured more accurately because it supports new ways for engaging customers. For example, the latest virtual glasses track a user’s eye movements and facial muscles, collecting data about the user’s responses to specific marketing messages.  

As organizations increasingly embrace the metaverse, many banks are starting to explore its possibilities, as well. Banks already in the metaverse include J.P. Morgan, Deutsche Bank, CaixaBank and HSBC, to name a few.

Banks that are new to the metaverse may be asking the following:

• What is the metaverse?
• What are appropriate use cases for a bank?
• What is required to be successful?
• What are the risks?

My answers to the first two questions are discussed in this blog, and I’ll answer the last two questions in a follow-up blog.

What is the metaverse?

The metaverse is a digitally-enabled world where organizations and communities interact in real time. It’s a sustainable virtual-reality environment where people come together to learn, work, shop and share new experiences. It can be best explained with an example. Let’s consider one of the most common banking services—applying for a loan to buy a home.

What would the optimal customer journey for this type of service look like in the metaverse? Let’s explore by putting yourself in your banking customer’s shoes.

First, as you search for a new home, you could view the digital twins (a real-time representation) of available homes, accompanied by a family member or friend. To help you consider the best options in light of your personal finances, you could invite a virtual banking agent to join you, as well.

You could continue the discussion with your banking agent in your own virtual living room or in a virtual bank branch, reviewing various repayment schedules and receiving advice on saving money. When the actual purchase is completed, all parties could finalize the transaction in a virtual branch.

To complete the purchase, you could use your digital wallet and pay using regular money or the crypto currency of your choice. A consumer survey conducted by CGI shows, year after year, that customers trust their banks. Purchasing a home is something that customers want to do in a trustworthy environment, which supports the concept of establishing a bank branch in the metaverse.

Finally, to thank you for doing business with the bank, the bank could grant your children access to a virtual world that allows them to interact with famous cartoon characters from the latest blockbuster movies.  

Moreover, in the metaverse, you could buy a virtual apartment as a speculative investment or to show off to your friends. In this scenario, you would receive a unique digital token that gives you exclusive rights to the digital apartment. This is an example of a non-fungible token (NFT), which allows you to transfer ownership of everything you can imagine and can be applied to any kind of asset.

A true metaverse is open to everyone, meaning that your digital character could move anywhere. Today, however, there are still separate metaverses, including Sandbox, Decentraland or Meta’s Horizon, and there is no integration or interoperability to make it possible for your avatar to easily move between these technically separate metaverses. As a result, the digital apartment you buy and your bank agent could exist in different metaverses.

How can a bank join the metaverse?

Now, let’s head back into your role at the bank. A safe way to start the metaverse experience is with an internal use case. For example, you could launch a new employee onboarding experience or collaboration environment in your organization’s own metaverse. Within our UK operations, for example, we are onboarding members in our bespoke Meta Hub metaverse environment, a space that allows effective one-on-one or one-to-many information sharing and collaboration.

Another strategy for getting started in the metaverse is to buy space for your bank branch. As the old saying goes, the three most important things to consider when establishing any business are location, location, location. This also is true in the metaverse, where the price of virtual land has gone up since the metaverse’s inception.

You could consider investing in a metaverse location that attracts a lot of traffic. For example, you could decide to locate your bank in the “Manhattan” area of the metaverse or another exclusive location more suitable for your bank. As with traditional channels, understanding your target audience is key.

Another potential opportunity is branding your bank as a forerunner in new technologies through metaverse participation. This, in turn, attracts Generation Z customers and employees, who are most likely to be early adopters of the metaverse. You could consider offering a metaverse service that is attractive to these customers and gain valuable media exposure.

One of the metaverse’s strengths is that it can provide the human touch for banking interactions. A study we’ve done in Finland shows that, although Generation Z is willing to use digital services, there are still some banking services where the majority of these customers hope to interact with a real person. Examples of such services are buying a first home or receiving advice on managing personal finances, investments or savings.

Once you have chosen the service you wish to offer in the metaverse, you can look at the service from the customer’s perspective. Spend time understanding the real customer need and related end-to-end processes. Identify the ecosystem needed to build a frictionless customer experience that will fulfill the customer’s need.

How to get started

Start exploring the metaverse now to make sure you’re learning and keeping up with this emerging technology. Attracting and retaining future customers depends on interacting with them in their channels of choice. Although there are many elements to consider when choosing your bank’s first use case, one main principle from the existing world still holds true—be sure to include customers in the design phase to drive user adoption and true customer benefits.

Another very important aspect to consider when choosing your first metaverse use case is whether the service is currently working well in existing channels. My next blog, “What is needed to be successful in the metaverse and what are the risks?” will cover this topic in more detail. In the meantime, feel free to reach out to me for further discussion.