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Technology is the driving force behind jobs, economies and industries. It has also shaped lives. The banking industry isn’t privy to this information. The history shows that those who embraced technology early and at the right moment continued to be active rather than die. India and the banking system around the world are big believers. The banks have been banking on two things for a long time: if they get customers’ attention when they are young they can keep them for life, and the relationship between the executive and customer in the traditional physical space. They have been open to the adoption of Metaverse and virtual realities in their systems. It is safe to say that they are open to adopting Metaverse in their systems. The banks know they have to use the virtual world to keep their digitally inclined customers. Financial institutions will also be extending their offerings to decentralized platforms and communities, giving them an opportunity to expand their customer base.
Blockchain and tokenomics have given rise to a new form of currency- cryptocurrency, which can be traded, invested, or transacted by holders. With cryptocurrency, one can also buy virtual assets like NFTs or engage in virtual gaming. Statista estimates that the number of users in India alone will reach 328.70M by 2027. With the advent of cryptocurrency, banks have every reason to cater to the digital needs of their customers. And with cryptocurrency entering the picture, banks have all the reasons to cater to young customers’ digital requirements.
In February last year, JP Morgan Chase, the largest bank in the US, became the first in the sector to foray into Metaverse by opening a lounge in the Decentraland and also released a white paper decoding the space for its customers.
On the Indian front, the Union Bank of India bagged the first mover advantage when it opened a Metaverse virtual lounge and open banking sandbox environment in partnership with Tech Mahindra. The bank told Entrepreneur India that it wanted to reach out to younger customers and recognize the potential of virtual worlds for financial education, customer engagement, and exploring new business opportunities. With Uni-Verse, Union Bank of India will let customers enter the lounge by choosing their Avatars where they can browse through various schemes and products.
Recently, Punjab National Bank too made its way into the Metaverse with its virtual branch- PNB Metaverse, powered by Kiya.ai. In this new phase of internet, where sites and apps are merged into a persistent 3-D environment, banking cannot ignore the changing technologies that aim to provide better service and convenience for its customers. Metaverse, a cutting edge technology that has a human touch with the virtual look of a Bank Branch can be used to personalize and deepen customer interactions for the Bank. PNB saw it as a chance to re-establish the connection with customers lost through digital channels, and launched PNB Metaverse to provide a better digital experience for its Gen Z clients,” Punjab National Bank (PNB), shared with us.
“We currently work with over 600 banks in different areas such as core solutions, regulatory technologies, and digital banking. When we analyzed the metaverse and the future of devices, we were convinced that the browser was where the customers would be. So if that browser was to be now resident on a VR device or a headset, or if it was to be resident in IoT-based device somewhere, then the bank needs to extend its services there,” shared Rajesh Mirjankar, Managing Director and Chief Executive Officer, Kiya.ai, which launched India’s first banking metaverse, ‘Kiyaverse’, for banks and non-banking finance companies (NBFCs).
“Banks keep on putting some part of their technology present into new technology. The answer will come when consumers ask for it,” said a senior executive at one of the largest financial institutions in the world. Furthermore, the future generation is bound to prefer virtual to physical environments to avail banking products and services.
“The response has been overwhelming, with the Bank’s metaverse presence enhancing its brand image, facilitating immersive customer interactions, and fostering innovative financial solutions,” Union Bank of India shared.
USE CASES
Virtual branches have been the most preferred initiative of banks. Deloitte identifies ten clusters that fall under this trend: virtual branch, immersive advice, gamification and products and services. Other potential services that can be leveraged by banks with Metaverse include fund withdrawals from virtual ATMs or branches into a virtual wallet, customer care services, appointments and consultations with advisor’s avatar, house tour with a mortgage broker in real time, discussion and purchase of financial products, attend virtual events of the banks and seek help from virtual assistants.
FUTURE
Despite all the enthusiasm and optimism, Metaverse is growing and is still at its nascence stage. As the Governance Structure & Guidelines are still to be defined for extending Banking Services to Metaverse, all other facilities will be offered through physical Bank branches. As we live in the era where technology is used to connect the digital and physical worlds, a balance between virtual and physical banking is maintained. Bank will decide its course of action based on the challenges and opportunities in adopting Metaverse. Bank will explore all possible opportunities as appropriate,” said PNB.
Much the same way that every technology has concerns so does this. Metaverse is associated with high-risks such as fraud, data breaches, and money laundering. There are always what-ifs in life.