AR, VR, AI, IoT and blockchain are advancing fast. Similarly, their penetration into our daily lives, too, is increasing rapidly. They are being used across healthcare, manufacturing, fintech, hospitality, customer service, and many more industries. Looking at how things are, these technologies can significantly enhance the services offered in these various sectors. For example, the future of fintech can be completely transformed by using VR for conducting virtual meetings by financial institutions and enabling customers to pay for products virtually, forgoing the need to step out of your home.
However, one application of these technologies that has everyone excited is the metaverse. Metaverse promises a universe beyond our real world. It’s a place where our real world, augmented reality, and virtual reality intersect. The intersection gives birth to an interactive, immersive, and collaborative shared virtual 3D environment.
In addition to these, the metaverse is based on AI, ML, IoT, and blockchain technologies. Metaverse is not a new concept. The word ‘metaverse’ can be traced back to 1992. However, its implementation and popularity have only risen in recent years.
Tech giants like Microsoft, Google, Meta (formerly Facebook), Nvidia, and Unity Software have already made huge investments in the metaverse projects. They are betting on it to become the next big thing!
How Will the Metaverse Impact the Future of Fintech?
Digital or fintech solutions are already transforming how transactions are carried out in real life. Cashless transactions are already on the rise, and these will form the basis of financial transactions carried out in the metaverse.
The metaverse will provide a world where people can buy and sell things in real estate, manufacturing, textiles and others through digital currencies. This will form the backbone of the huge economic metaverse ecosystem. And this is no distant future we are talking about. It’s happening now. For example, the metaverse real-estate firm Republic Realm has already paid $4.3 million for a plot of land in the virtual world Sandbox.
Here’s a look at some fintech services applications in the metaverse:
Every transaction on the Metaverse will be carried out using cryptocurrencies. They are already being used in the real world for the same purpose and are recognized as legal tenders in many countries across the globe.
Based on blockchain technology, cryptocurrencies offer better security, simplify transactions, reduce settlement times and provide better private transactions. Thus, it wouldn’t be a surprise that cryptocurrencies become the official payment method in the metaverse and eliminate the use of dollars, pounds or rupees to carry out financial transactions entirely.
However, we will have to see how each cryptocurrency performs in the metaverse and which becomes the preferred and standard choice for carrying out transactions (like the US dollar in the real world).
The metaverse wallet is similar to the current digital wallets offered by financial institutions. The only difference is that metaverse wallets will help you store cryptocurrencies. The wallet can be used for carrying out financial transactions as you do in real life. For example, the metaverse wallets can be used to buy and sell products, like NFTs or virtual real-estate, on the metaverse platform. Similarly, it can also be used for receiving or transferring tokens between users within the metaverse.
The future of fintech services can help improve financial literacy among individuals. Banks and other financial institutions can use gamification for the same. For example, banks can help their customers with real-world financial decisions in the virtual world by recreating those scenarios in the metaverse through gamification modules. This can help boost financial literacy while eliminating the risks with real, hard-earned money.
Many banks and fintech services are already starting to explore this arena. For example, the online banking services provider Ally has already created a game called Fintropolis. The game helps players understand various financial concepts like budgeting, taxation, investing, stock trading and even buying properties. The game is currently targeted towards the younger generation (high-school students). It aims to provide them with the knowledge and confidence they’ll require in the future regarding financial matters. The metaverse will see various fintech service providers developing similar apps to attract and retain customers.
Virtual Employee Onboarding and Training
The metaverse can also enhance the user experience of financial service professionals. The pandemic has led to the adoption of remote work, limiting the interaction and socializing between employees. The metaverse provides a workaround for that. Financial institutions can create a virtual office in the metaverse where the employees’ digital avatars can work in a simulated real-world environment. Employees can talk, interact and hang out with each other in the metaverse, much like the real world.
Moreover, banks and other fintech services businesses can hold virtual meetings in the metaverse. They can also use the metaverse for new employee onboarding and carry out associated activities like training them. For example, Hana Bank recently held a commencement ceremony on their metaverse platform for their newly-inducted employees. Similarly, NH NongHyup Bank held an award ceremony and opened a virtual branch on a metaverse platform.
The future of fintech services in the metaverse seems exciting. However, banks and other financial institutions will have to make quick investments in the digital economic ecosystem of the metaverse if they want to succeed on the platform and be future-ready. That being said, the ROI will take a long time, and fintech services should be prepared for it while the metaverse is in its nascent stages.