Demystifying the metaverse for banks, part 2

In my first blog in this two-part blog series, I explained what the metaverse means for banks. I also shared some potential ideas for how banks can begin to test the metaverse. In this second blog, I’ll share some insights on what is needed to succeed in the metaverse, along with key risks in offering metaverse banking services.

Check your services in traditional channels before heading into the metaverse

Before testing a particular banking service in the metaverse, it’s important to first determine if that same service is functioning well in existing channels, including mobile apps, websites, and call centers. Here are some examples:

Example 1

Jill, a bank customer, wants to talk to a real person about her credit card not working. Can she reach a real person through chat or phone? How long does it take? Is that person able to quickly fix the problem? If Jill is unable to receive support through existing channels, then there is no added value in offering her support services in the metaverse. The underlying processes and data issues have to be fixed first. A fancy waiting lobby in the metaverse won’t improve the customer experience if Jill is unable to have her issue resolved via traditional channels due to technical or process issues.

Example 2

Jill wants to contact her bank through a chatbot to discuss her mortgage loan payment schedule. As she types in her question in the bank’s chatbot, the answer is, “Sorry, I don’t understand this. Here is a link to our frequently asked questions. You also can call our contact center.” If this is the maturity of the bank’s artificial intelligence capabilities, then it is unlikely that this service would function well in the metaverse. Having a virtual dragon figure reply to Jill doesn’t bring her any value.

Example 3

Jill receives a letter from her bank notifying her of a late loan payment. The following day, she receives a call from the bank’s call center offering investment advice, which, of course, is not relevant since she is in a difficult financial situation. A bank should have a 360 view of each customer in every channel, and customers should be able to move seamlessly between channels without any friction along the customer journey. If this is not possible in existing channels, then adding the metaverse to the mix will make a banking service even less effective and profitable.

To summarize, before offering a banking service in the metaverse, a bank should ensure that the service operates well in its current channels. This requires that the bank optimally leverage, for example, the following technologies: artificial intelligence, natural language processing, cloud and advanced analytics. Maturity in using these technologies will ensure readiness in embracing the new technologies and skills required for the metaverse, including, for example, 3D art, gaming, blockchain or cryptocurrencies.

Plan for how to mitigate key banking risks in the metaverse

There are many risks related to banking in the metaverse. To start with, the security challenge is more complex than with traditional banking channels. Issues to resolve include customer identity (Is this the right person?), data security, and data access (Who should be able to see and use the data?).

There are no common rules and regulations in the metaverse, which exposes banks to many different types of risks. For example, if a bank were to offer loans through a branch provided by a platform company in the metaverse, there is a risk that one day the company might impose a tax on every transaction conducted on its platform. If the bank would suddenly have to pay an additional tax on every loan, its loan business might no longer be profitable.

The metaverse is tightly connected to cryptocurrencies and non-fungible tokens (NFTs). Both of these currencies are highly volatile, which makes it difficult to establish a credible business case for offering a specific banking service in the metaverse.

Trust is another key issue and potential risk. Banking is a business of trust. When discussing meaningful events such as buying a home, people typically want to look another person in the eye, and they unconsciously observe this person’s body language. A virtual character can’t offer this experience. Therefore, there is a risk that, despite the opportunity to negotiate a mortgage in the metaverse, customers would still choose a video negotiation or even a face-to-face meeting in a physical branch.

For any innovative new service, there always is the risk that, for some reason, customers don’t want to begin using the service, and, as a result, there is not enough demand or volume to support it.

Finally, the fact that business models and technologies in the metaverse are new to everyone, there are many kinds of business risks. Examples of questions to consider include: What is the unique selling point in the metaverse? What are the potential costs and revenue opportunities? How can you protect against price volatility in cryptocurrencies? How can you conduct marketing in a whole new way to exploit metaverse opportunities?

Prepare your journey into the metaverse

There are many reasons why banks should start experimenting with the metaverse, but any experimentation should include testing services in current channels and conducting a risk assessment. CGI is a partner with a realistic approach to this new technology. While we understand its opportunities, we also understand its risks. To help banks enter the metaverse in the best possible way, we offer an inspirational workshop with our metaverse experts to identify use cases, assess risks, and develop a roadmap. To learn more, feel free to contact me.