Banks Are Even Innovating In The Web3 Metaverse Space
Jun 16, 2020
Understand why banks are immersing the ‘digital natives’ generation in the virtual Metaverse
With the introduction of Web3 banking over the past few years, the role that banks play as the central intermediary, ledger, and custodian has been increasingly diminished, indicating important implications for all parties involved. Smart contracts have been brought in and begun automating a variety of processes, including remittances and asset swaps.
Blockchain and cryptocurrency are the core technologies that enable decentralised finance. When making a transaction in a conventional bank account, it is recorded in a private ledger (bank transaction history), which is owned and managed by a large financial institution. Blockchain works as a decentralised, distributed publicly accessible ledger where financial transactions are recorded in encrypted computer code.
Web3 technologies, notably blockchain, smart contracts and NFTs, are capable of introducing new and improved capabilities for the entire banking industry. Where net banking is the norm in Web2, Web3 offers an even better experience than net banking with the introduction of Metaverse banking, which allows for a more personalised and detailed user experience.
Today, some banks have already launched virtual spaces based in the Metaverse. Virtual spaces such as these are expected to provide a better banking experience for their customers. Customers can explore the metaverse space to gain relevant information on banking activities such as loans, deposits and government welfare programs.
A common trend in new ventures is that they utilise Web3 to facilitate decentralised financing by connecting users directly to financial systems, believing that users don’t need banks to manage their money. This allows most of the world’s population to borrow, spend, and utilise digital money without the need to submit documentation or comply with regulations normally required by traditional banks.
Some of the current emerging platforms successfully implementing the Metaverse concept are: The Sandbox and Decentraland, while open-world concept games such as Roblox and Fortnite have a growing community behind them. HSBC has been a frontrunner for implementing the Metaverse concept, purchasing land in The Sandbox, as they have set up virtual storefronts. This was done as an effort “to create new experiences through emerging platforms, opening up a world of opportunity for our current and future customers and the communities we serve,” as mentioned by their Asia Pacific region CMO, Suresh Balaji.
JP Morgan Chase, another global behemoth in the banking industry, has done the same, setting up a storefront in Decentraland’s virtual ‘Metajuku’ mall. This virtual lounge area, called Onyx, gives their visitors information about the bank’s blockchain and other technology-driven initiatives.