The idea of the Metaverse is on everyone’s lips. For banks and savings banks, the concept could be an opportunity. The established credit institutions hold one trump card in their hands, which they would have to play properly in order not to be left behind again.
Facebook does it. Game developer Epic does it too. Microsoft does it too. Many large Internet and technology companies rely on the Metaverse these days. Mark Zuckerberg’s group even renamed itself Meta to underline the company’s ambitions. What seems certain: The Metaverse promises new sales and revenue opportunities, it offers the digital industry growth prospects for decades to come and could completely redefine the role of the Internet. It is uncertain whether this will happen.
For the classic financial industry, however, the metaverse plans of the tech and online players once again raise the question: What opportunities will arise? Could the Metaverse offer new opportunities in the battle for the digital customer interface – or is the opposite the case? And what does the metaverse ultimately mean for your own business model?
South Korea’s banks are leading the way
The idea of the metaverse was significantly shaped by the American author and analyst Matthew Ball . According to the simplest definition that can be derived from Ball’s explanations, the metaverse is an ecosystem in a virtual space with smooth transitions into the physical world. All participants in this ecosystem can exchange information with each other. Digital goods and services can be traded and consumed in exactly the same way as in the physical world.
A look at Asia shows what such metaverse solutions could look like in the financial sector. In South Korea, the first banks are relying on virtual branches and are testing their future in a new guise. The Shinhan Bank from Seoul is working on its own Metaverse platform for this . With KB Financial Town, KB Kookmin Bank – South Korea’s largest financial institution – has already built a virtual business and office complex through which customers can access various financial services as avatars.
Where payment services and investment forums already score today
Contrary to what such examples suggest, however, the metaverse is not a sure-fire success for banks and savings banks. On the contrary. In the investment area and payment services, other players have long been involved. Their offers may still appear today without three-dimensional avatars and colorful, animated worlds. But in some central points they are much closer to the Metaverse ideas of Mark Zuckerberg than classic banking solutions – they network and connect users with each other, often go hand in hand with gamification and blur the boundaries between physical and digital asset classes.
PayPal, for example, has been offering since the recent expansion of its app users the ability not only to send money to friends and family, but also to manage loans, pay via QR codes in physical stores, trade crypto assets and support charities. All this without complex IBAN numbers, instead just clicking on the simple avatars of the users is enough. The subreddit WallStreetBets, on the other hand – made the headlines in particular by the Gamestop share – creates a common digital space for investment enthusiasts whose approach to stock trading is shaped in part by a culture of gamification. What such examples suggest: The metaverse in the financial sector should be less a question of the right technologies overall. Rather, it is the ability to establish one’s own networks and build social relationships.
Virtual department stores for the new service world
Unlike in the investment area or in payment transactions, for example, data-driven technology companies regularly come up against limits when it comes to real estate, which cannot be overcome solely through the great scalability of their own technologies. The reason for this is the strong regional character of the real estate markets. Of course, apartments and houses can be traded worldwide. But it always takes those who look after the property on site. It is precisely in this area of tension between the real estate asset class on the one hand and global availability on the other that the banks operate.
The idea that banks and savings banks position themselves as coordinators of large ecosystems in the real estate sector is not entirely new. However, with the advent of the Metaverse, the adoption of such models and the potential these solutions offer become more urgent. Supplemented by virtual and augmented reality elements, for example, virtual department stores could be established for all services related to the complex of living.
Hybrid house inspections and digital colors from the online shop
Together with technical service providers, the banks create virtual images of the respective properties, which can be perfectly merged with the physical houses and apartments during on-site inspections. The banks are always ready with the right financing, appraisers, craftsmen and other service providers who interact with each other via the same Metaverse environment.
A prospective buyer’s house inspection could, for example, take place in a hybrid way, the broker would be on site, the prospective buyer would only be connected. Digital paints can be bought in the online shop of the local painting shop during the tour and applied to the virtual walls as a test. The bank’s adviser, who is connected, adapts the financing to the buyer’s renovation ideas in real time, and friends and acquaintances of the interested party discuss various design options via connected social media channels. If the viewing is successful and the property is purchased, the appointments with the painter and other trades are already entered in the calendar in the appropriate order.
The example makes it clear how the banks – deeply integrated into all processes related to real estate – could leverage completely new cross-selling potential in this way. And while online and tech corporations also compete with the bank in other business areas, the regional and local focus in the real estate sector is tantamount to a firewall for the institutes.
One solution for everyone? No!
Not all institutes will be able to benefit from such possibilities of the Metaverse. However, ecosystem solutions in the real estate sector can be particularly promising for savings banks and cooperative banks as well as the large private banks, all of which can rely on association and group structures.