The possibility for the Metaverse to spread into conventional industries, such as, cannot even be discussed until a common definition of the term has been agreed upon. The Metaverse refers to a new manner of interacting with cutting-edge technology like AR as well as VR. The development of these ideas has resulted in the emergence of a digital marketplace called the Metaverse.

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McKinsey & Company found that the financial sector has joined other sectors in investigating the Metaverse for prospective opportunities, albeit few have yet attempted to do so on a global basis. The paper states that the growth of the Metaverse's influence on the industry is contingent on the development of the technology involved, particularly via the use of Web3, as well as the extent to which platforms are embraced as a regular part of human interactions.

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Dehyping to Generate Business Impact

The effects of the Metaverse on several fields have generated much discussion. Virtual as well as Augmented Reality (VR/AR) technologies, formerly assumed to be the purview of the entertainment and social media industries, are finding real-world applications in more conventional fields like banking. There's many, obviously, a number of issues that need answering before we can go into their ramifications.

How Companies Currently Use the Metaverse?

Banks have been testing with Web3-enabled Metaverses as well as participating in the more established Web 2.0 Metaverse. Companies in the financial sector are using Web 2.0 tools for things like staff education and development, the establishment of virtual "financial cities," telecommuting hubs and interaction areas, and the provision of digital investments advising services. Although these applications are well-established, they have had only a limited effect on the financial services industry's core business model. Engaging models are beginning to emerge in the Metaverse, made possible by Web3. To better interact with e-sports fans, HSBC, for instance, has acquired real estate in The Sandbox. Sokin, a London-based financial technology firm, is developing the backend systems necessary to handle Metaverse-based financial dealings as well as investment opportunities. Meanwhile, Zelf, a neobank, has introduced integrated banking for Metaverse players with its MetaPass in Discord. Rear assistance for digital real estate finance in the Metaverse is provided by a number of firms, one of which being the North American technology firm TerraZero. Many banks and other financial institutions are investigating the potential benefits of the most recent Metaverse development.

Practical Applications in Financial Services

The banking sector may be profoundly affected by the Metaverse's capacity to build virtual settings for individuals to interact. Professionals at COVID-19 employed VR and AR to collaborate through tele-conferencing using annotation, messaging, and screen-sharing technologies to increase productivity while being physically apart. Individual bankers may benefit from virtual reality and augmented reality, too, especially in terms of data visualization, which can help them mitigate economic problems as well as provide more accurate services to their clients. Their anticipations will be raised, which will increase market competitiveness and new product development. In addition, the Metaverse's virtual surroundings serve as a focal point from which enterprises may engage customers across a larger demographic and geographic area. Those online marketplaces may accept electronic currency and conduct all business in the Metaverse.

What Could Come Next?

Virtual variants of several advanced financial services may arise to serve users as the metaverse has the ability to grab a bigger part of daily human interactions. Some possibilities involve banks and banking services embedded in native metaverse venues, such as multi-currency cash management and credit skills training games, monies and investing services for metaverse projects, such as metaverse-specific investment funds, and gamified credit education and loyalty experiences for customers. The rate at which these applications develop is correlated with the degree to which the metaverse is used. Also, the benefits and ease of using monetary solutions in the metaverse must've been greater than those of traditional options like the internet or a physical bank. If participation in the metaverse continues to grow, banks and other financial institutions will have to determine whether to go in headfirst, create a more modest presence, or remain on the sidelines for the time being.

The Metaverse is rapidly becoming more than just a place to store and share information; it is also the catalyst for a brand spanking new economic system based on the bartering of immaterial goods like non-fungible tokens (NFTs) in the fields of fine fashion & art, as well as in the areas of digital tourism, entertainment, and property investment. Huge amounts of money are being invested in digital encounters which can solely be accessed in cyberspace, and this trend of "Metaverse monetization" is expected to continue rising. With more money being invested as well as other financial transactions taking place, the financial sector as a whole is able to flourish, which in turn creates employment in the Metaverse. The dispute continues over whether the Metaverse economy should be a closed system, driven by Big Tech, or open platform, with increasing dependence on blockchain technology. Commission for Digital Competition in the European Union Margrethe Vestager has said that creating a unified VR ecosystem will be the next task for antitrust authorities. Open banking, an innovation in financial services that has boosted market competition, can be linked to the open vs. closed system debate on the premise that different financial institutions can work together to bring about a broader range of services for consumers, resulting in greater shifts in the industry

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.