Within the short time frame until Meta's official statement, the Metaverse has undergone its very own extremely rapid maturation contour, complete with just a preliminary flurry of activity, heightened expectations, cynicism from certain market sections, and now a flurry of companies filing trademarks and patents to safeguard their portion of the pie. Added participation by businesses, as predicted by Bloomberg Intelligence, will drive the size of the industry to $800 billion by 2024. Companies would need to allocate resources toward fostering relationships with customers in the virtual world since it will soon become their natural home as a result of the development of related marketplaces.

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Analyzing the possibilities of the Metaverse in banking requires first defining what a Metaverse is and what makes it tick. It's easy to think of the Metaverse as a digital version of our actual world. There are enough movable parts to render it a reality, and then a commercial potential. Essential to the growth of the Metaverse are the platforms, technologies, market, as well as trade.

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We have defined the Metaverse as nothing more than an unique economic model, an innovative approach to doing enterprise propelled by the synergistic effects of rapidly developing technology. The Metaverse is based on the backbone of interactive as well as decentralized technology. Augmented Reality or Virtual Reality, haptic technologies, and spatial technologies give a durable as well as improved digital user experience, while decentralized technologies like Web3, DLT, and NFTs provide a stable and resilient infrastructure and value exchange method.

If you want to see how the Metaverse may alter the manner businesses as well as consumers see a service or product look no further than the banking industry. The possibility for a fully immersive user experience is one of the most revolutionary aspects of the Metaverse for financial institutions. They have the option of creating digital places that are unique for each consumer or offering a uniform one. Existing apps need customers to carry out fundamental operations, such as transferring funds, balance inspections, and so forth all while on the go. However, the Metaverse may alter the read/write format of the most recent versions of mobile banking apps. This applies to physical goods and services. Picture yourself able to fulfill all your banking needs, normally performed at a branch, without ever leaving your house. Metaverse users may use ATMs, buy at branch stores, and even sponsor simulated events.

Evolution of Banking

It's necessary for banks to take stock of their current degree of maturity and the history of banking through the different stages prior to actually diving headfirst into the Metaverse. Following are the 4 stages or phases of Banking:

        1. Traditional Banking

It's a central bank-regulated, two-tier banking system that places a premium on face-to-face contact with customers. Conventional banking, which included retail, industrial, as well as wealth management services, was manual as well as publication and completely lacks the flexibility to cater to customers' individual preferences and needs.

        2. Digital Banking

In the last decade or so, banking services have been more digitized, and this trend may be followed in two ways. We first must digitize our current procedures and make them accessible through digital means, such as the web and cellular devices. Secondly, designing and constructing brand-new consumer experiences with virtual as well as information front and center. Here, financial institutions function more like technology firms, focusing on enhancing their clients' experiences across a range of touchpoints.

        3. Open and Beyond Banking

Significant progress has been made in banking as a service in the previous three to five years, allowing banks to connect and provide third-party services using application programming interfaces (APIs). This has led to the proliferation of "neo-banks," or electronic banks, as well as an increase in the number of banking institutions that provide open market services across several industries. Let us take an example, energy services, health services, buying and selling automotives, home concierge services, and so on.

        4. Decentralized Finance (DeFi)

The introduction of Web3 and the widespread use of blockchain technology over the last two years has ushered in a whole new decentralized, transnational, safe, and speedy on par with conventional financial transactions economy without intermediaries. A new digital as well as creative economy has emerged as a result of the widespread use of cryptocurrencies, Non-Fungible Tokens, and virtual money issued by central banks; they have made hitherto unrealized gains in the fields of artwork, property investment, as well as video games possible. For conventional businesses to succeed in the face of competition from fintech's, they need to develop a plan for reaching out to this new demographic of consumers while also act on opportunities authorities.

        5. Metaverse Banking

The banking industry is only one that has seen increased interest in the Metaverse in the last six months. Even if technological advancements in software and hardware are what allow the Metaverse to function, it is still in need of a functioning economic system. This is where NFTs will shine as the key to the Metaverse's economy (MetaFi). The need for a reliable method to propel the exchange process in the Metaverse is expected to skyrocket as online socializing, working, as well as gaming become a standard

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.