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<\/p>\nA new digital era is upon us. The development of new technologies we are witnessing is leading us towards a digital transformation on a global scale, part of a technological evolution that many observers are describing as web 3.0. Among all these developments, one in particular is receiving a great deal of media exposure and public interest: the Metaverse. <\/p>\n
An immersive virtual world based on blockchain technology (the technology behind cryptoassets), some agree that this universe will revolutionize the way tomorrow’s society functions. All business sectors are concerned, and many players have already bet on the metaverse. <\/p>\n
With this new technology, the traditional banking model risks becoming obsolete. To counter this, it’s up to banking institutions to take the lead and adapt to this emerging economy. We’re still in the early days of blockchain technology and the metaverse, but we can already imagine the many opportunities that lie ahead for players in the banking system. <\/p>\n
Today, banks have the power to be forerunners in this field. There’s still a long way to go, and the opportunities are numerous. According to Gartner, the famous American consultancy firm, 1 in 4 people will spend at least 1 hour a day in the metaverse by 2026. Banks therefore need to embrace the opportunities arising from the public’s burgeoning attraction to these virtual worlds, in order to maintain a position of strength in all types of economy, whether physical or digital. <\/p>\n
Banking system players have everything to gain from being among the first on the metaverse scene. To optimize the mass adoption of this new technology, banks can establish themselves in these universes to better welcome future users, and to maintain their key role in the global economy. The most obvious example is to imagine opening virtual branches, in which banks could offer immersive customer service experiences. Beyond simply being established in the metaverse by adopting a physical branch model, banks could thus reach customers who cannot, or do not wish to, physically visit bank branches. We could also imagine that in these virtual branches, users will be able to invest in cryptocurrencies and NFTs. The secure environment of bank branches could encourage customers to invest their cash in these new types of assets. <\/p>\n
At the same time, traditional banks can capitalize on the rise of the metaverse to counter growing public interest in neobanks, which benefit from the agility offered by dematerialized banking services. By opening virtual branches, “classic” banks can hope to win back customers lost to this new generation of banks. <\/p>\n
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The value of entering the virtual world through agencies is limited by the fact that the metaverse is still in its early stages of development. As Cornerstone CRO Ron Shevlin explains, “the money in the metaverse isn’t in the metaverse right now. It’s in building the metaverse”. The idea is that, as long as this new technology is not at a more advanced stage of deployment, establishing a foothold in the metaverse would not make financial sense, given that the number of users, and therefore potential customers, is still very small. These universes need to be built up and fed with cash and users, before their numbers are large enough to make the development of traditional virtual banks worthwhile. <\/p>\n
It would therefore be preferable for banks, as a first step, to offer their customers financing assistance via loans to encourage them to invest in the metaverse. With land prices on the main exchange platforms rising dramatically (+700% by 2021, according to Forbes), we are witnessing an unprecedented craze for virtual assets. Demand for this type of financing will certainly be very strong. This solution is currently being explored by TerraZero Technologies, the first company to have financed the acquisition of a virtual asset via a mortgage solution: the bank finances the purchase of the asset, in the form of an NFT, and recovers ownership in the event of customer default. This represents a quick way for banks to take their first steps into the metaverse, as it involves adapting a product widely used in the real world and applying it to the virtual asset market. <\/p>\n
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One of the current challenges facing banks is the emergence and democratization of a new type of finance: decentralized finance (DeFi). An ecosystem independent of any controlling body, DeFi enables any user to take advantage of financial services at low cost, without intermediaries and virtually instantaneously. Users finance each other via the blockchain, putting traditional banking on the back burner. The development of the metaverse could therefore be encouraged by a democratization of DeFi: if banks don’t want to finance the purchase of goods in the metaverse, users will go through DeFi. <\/p>\n
One solution for banks would be to develop their own DeFi applications, to bridge the gap between their traditional model and this new generation of financing. This is a solution being exploited by Eastern Caribbean Central Bank (ECCB), which has developed the “EQIFI” DeFi platform, enabling users to own both virtual and traditional assets within the bank. Brad Yasar, CEO of EQIFI, explains that future users of the metaverse will want to be able to easily use their digital assets in reality, and their traditional currency in the metaverse. ECCB is therefore offering its customers this flexibility, by providing credit cards that enable them to use their virtual money in the real world, by automatically converting their crytocurrencies into fiat currencies, and vice versa. <\/p>\n
Many other possibilities could be imagined.<\/p>\n
To borrow from the “sandbox” theme that gave rise to the name of The Sandbox, one of the leading players in virtual worlds, the metaverse is still at a very primary stage, where everything has yet to be built. In this unexplored field, banks can choose to build the foundations of tomorrow’s society and be its pillars. <\/p>\n
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