The Impact of the Metaverse in Banking and Finance
11 min read
Many have already heard about the rebranding of Facebook by launching the Metaverse. This is a direct confirmation that in the relatively near future, the boundaries between the user and the provider of any service will be very blurred. Accordingly, if we are talking about the sphere of finance, the boundaries between the client and the bank will also be blurred. This is inevitable. Banks will become applications in which all actions can be performed online, and some banks will have the option of physical offices/branches/showrooms. The Metaverse can play a big role in the evolution of banking and the finance industry in general.
Banking in the Metaverse
Metaverse development companies can create a virtual digital bank branch where customers can be engaged and provide more insights and personalized attention with virtual assistance. It can enable customers with a 360-degree view of their current position, the various status of their requests, new offerings, and many more. The customers and banking employees will be represented as avatars in the digital space, and they will have access to all of the services offered by the bank. Customers will have a personalized chat with any bank personnel for any service.
In fact, we are already seeing some of the largest financial institutions in the world getting ready to transition into virtual banking. Bank of America has decided to scale up its adoption of VR technologies after completing a pilot project that involved 400 people, according to TechCrunch. To deploy a virtual platform for training employees working with clients, the bank will have to purchase thousands of VR headsets. The pandemic has also spurred swiss UBS bankers to experiment with virtual reality, equipping their London traders with Microsoft HoloLens smart glasses to recreate the atmosphere of a trading floor.
Therefore, virtual reality solutions are starting to be used more, and your institution should start doing so as well to keep up.
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Currency in the Metaverse
The Metaverse is designed to gradually merge the physical and virtual worlds, allowing you to earn or create items in one world and share them in another. In a world where you can be anyone and do whatever you want, funding will be needed, and it can be obtained through digital currency.
Online payments have performed well in both the digital and physical worlds. The concept of cryptocurrency is based on this technology, and NFTs take both concepts a step further. Cryptocurrency is very important for virtual financial ecosystems as it gives people a simple, secure and transparent way to transfer funds from one user to another.
Simultaneously with crypto platforms, the Metaverse is also developing, which has unlimited growth potential. Cryptocurrency and NFTs are fueling this growth and are playing an important role in unlocking the full potential of this technology. Whether you want to fully immerse yourself in the Metaverse or simply take advantage of its financial advantages, cryptocurrencies are your path to wealth in both the digital and physical worlds.
NFTs are created using smart contracts. A smart contract is a program that executes agreements concluded between two or more parties, as a result of which, when certain conditions are met, certain actions occur. That is, when a previously programmed condition is triggered, the smart contract automatically executes the corresponding agreement. That is, when a deal is executed in the format of a smart contract, it will not be possible to collect money and run away without fulfilling the conditions. At the same time, you do not need to interact with anyone to receive a service, for example, to rent a property. It is enough to purchase a token, and the smart contract will do the rest of the work.
Standards are one of the components that make non-fungible tokens very powerful. They give developers assurance that the assets will behave in a certain way and describe how to interact with the underlying functionality of the assets.
Making Payments in the Metaverse
Payments in the Metaverse will include the availability of legal currency and digital currency. Based on China’s current policy towards digital currencies such as bitcoin, the contradiction between the centralized and decentralized currency in the Metaverse will continue.
To understand the logic of payment from the very basic, you should know that a payment involves:
- The identification of people and businesses.
- The identification of goods or services.
- Consensus on transaction information.
In the real world, payments use cards and mobile phones as carriers to recognize people, and recognition methods include encrypted currency, biometric information, etc. On the secure carrier, users store their unique identification code. In the Meta Universe, we need to think about a secure medium. With the current security path, adding SE security chips to any Meta Universe device becomes a carrier that can carry payments, such as VR glasses with SE security chips. On the other hand, the unique identification code of users and merchants has a wide range of imagination in the meta-universe, such as the recent Fire NFT technology.
Goods and services in the meta-universe become virtual, just like in games. If a commodity can change information by simply copying, pasting, and deleting, and the value of the commodity changes a lot in a short time, there are huge problems in the transaction itself. With the help of blockchain and NFT technology, this problem can be better solved. Consensus on transaction information. It should be similar to the role or mechanism of the current e-commerce platform so that both parties can be sure of the content of the transaction. This is also what the consensus mechanism in blockchain technology can achieve.
Owning Property in the Metaverse
When talking about the Metaverse in finance and banking, there needs to be a secure way to buy property in the Metaverse since real estate plays an important part in the financial industry. With NFTs, users can fully own their virtual lands and spaces in the Metaverse. The underlying blockchain enables users to prove ownership of the asset and develop their virtual real estate as they wish. Some uses for virtual real estate in the Metaverse include selling land for profit, renting land for passive income, building various structures like online shops on the existing land, or hosting social events.
An example of the Metaverse’s digital real estate scene is Decentraland, which recently hosted a virtual fashion exhibition in collaboration with Adidas, where designs were auctioned as NFTs. Virtual real estate also attracts musicians’ interest as they can perform and sell NFT tickets and merchandise online.
Already, the implications of this real estate revolution are being felt in an emphatic fashion. In June, digital property investment fund Republic Realm bought a parcel of land in Decentraland for more than US$900,000. Republic Realm, owned by investment fund Republic, is turning the plot into a virtual mall called Metajuku, modeled after the Harajuku district in Tokyo.
Such activities suggest it won’t be long before real estate investment trusts (REITs) begin sniffing out opportunities in the Metaverse. Property values move in line with economic activity, which is also booming in Decentraland. This is precisely what its creators envisioned when launching their virtual world in 2017.
Trust Skywell Software to Help Make Your Vision a Reality
If you are looking to create a metaverse solution in the finance or banking sectors, you will need AR developers and many other skill sets to help make your vision a reality. Skywell Software has all of the talents you need already on staff to start working on your project and has the necessary expertise to help you navigate through all of the processes involved in developing your solution. Contact us today to learn more about how we can help you.
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The Impact of the Metaverse in Banking and Finance was originally published in AR/VR Journey: Augmented & Virtual Reality Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
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