Three Ways Banks Can Engage Younger Consumers in the Metaverse
Commerce in the metaverse is real today, and banks must adapt business strategies to reach the next-gen of customers seeking personalized experiences.
While the metaverse has obvious potential for retail and gaming, these industries can’t function without secure financial transactions, which is why banking is critical for the success of this virtual world. Chander Damodaran, CTO at Brillio, explores how banks can best utilize the metaverse to reach the next generation of customers.
The metaverse – the virtual world where everyone will supposedly work, socialize and shop through avatars in the next few years – is the latest buzzword flying around, and businesses have already begun to take notice. The metaverse is a fitting environment for gaming, entertainment and retail to give people a novel and personalized customer experience like no other. From virtual concerts to collaborating with colleagues around the world, the metaverse has already proven its near-limitless potential.
Commerce in the metaverse is real today, and the financial services industry, banks, in particular, must adapt their business strategies to reach the next generation of customers who seek personalized experiences.
This creates significant growth opportunities for financial institutions looking to target a younger demographic and newer revenue stream. Here are three opportunities innovative banks are already identifying as ways to step into the metaverse and generate business value.
3D Banking: A New Form Factor
Retail banking has greatly evolved over the past two years. The mobile phone has become our bank, with people using their smartphones for everything from balance inquiries and transactions to payments.
Now, 3D banking is the natural next step for retail banks. It represents more of a change in form factor than a dramatic departure, a new customer channel that involves an augmented reality-based, interactive CX.
Banks are already setting up learning zones, interaction centers and bot-based customer support centers in the metaverse that brings all of the bank’s core services together for customers with its ecosystem of partners. They are also finding that the metaverse is a great way to enhance virtual onboarding for employees.
The White-glove Experience of Personalized Virtual Banking
The metaverse lets banks roll out the virtual red carpet for customers, with tailored experiences for specific segments and personas. Personalized virtual banking enables that special something that leaves customers feeling valued.
Within a metaverse branch, banks can create virtual rooms in which avatars of relationship managers and customer advisors work one-on-one with high-net-worth individuals, for instance. They might also provide services to individuals looking to create a college fund or businesses interested in obtaining loans.
Metaverse banking’s combination of personalization and community puts a fresh, modern spin on CX, and it’s an especially powerful draw for young banking consumers who are critical to the future of banking.
See More: The Metaverse Is Trending More Than Ever, But Is the Hype Real?
DAOs and the Potential for New Lines of Business
Every banking leader wants to explore the possibilities for new lines of business in the metaverse. Enter the decentralized autonomous organization or DAO. These collectives are blockchain-based digital organizations governed by their members rather than a central authority.
For example, a commercial bank that serves primarily as a lender to B2B customers might launch a DAO for its partner ecosystem, inviting everyone from its primary and secondary markets to its customers, investors and institutions to participate and creating the opportunity to cross-sell services.
With a DAO, banks become a medium to make things happen and earn money on each transaction. And because the decentralized metaverse runs on Web3, every transaction is registered and recorded on a blockchain. Security and provenance are guaranteed.
In an industry subject to stringent regulatory oversight and compliance, uncertainties around the future of the metaverse abound. Banks will likely face challenges as metaverse implementation continues to develop and evolve, including:
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- Lack of standards: among the multiple platforms and virtual worlds that make up the metaverse, standards are still evolving for file formats and interoperability.
- Lack of regulatory clarity: including the definition of digital assets. This could expose brands to privacy, reputational, data security, and legal risks. However, regulations are bound to catch up as metaverse activity increases.
- Need for specialized hardware: Sales of AR/VR headsets have been underwhelming, and consumer AR is still largely the domain of smartphones and tablets. For the metaverse to become a consumer success, headsets will need improved cameras, sensors, battery life, and displays. Banks should also start with applications that are able to operate on older hardware for greater accessibility – no use of creating a platform nobody can run smoothly.
- Existing platforms’ limited capacity: to support complexity in design and interactions. The platforms, however, are maturing quickly, and as banks gain a foothold, the platforms are bound to catch up.
Yet, these challenges should not serve as a deterrent for banks and financial services organizations looking to move forward, as congruent solutions are already underway. For example, among the tech industry, we are seeing increased mobilization to advance the development of virtual worlds. Major players in the space, including Meta, Microsoft and Epic Games, comprise the Metaverse Standards Forum that launched in June 2022 and focus on interoperability. To add, despite uncertainties about virtual worlds – and even amid global inflation and monetary tightening in the US – integration between digital currency and mainstream finance continues to grow. In fact, sixty percent of central banks are pursuing their own versions of digital currency, according to the Bank for International Settlements.
To connect with the next generation of connected consumers, banks must begin building their presence among the more popular metaverses and increase engagement with younger demographic audiences through 3D banking, personalized services and DAOs. The good news? For payment providers and retail and commercial banks, there are no obstacles surrounding the preparation, and it is not too late to get ahead. By building and investing in the infrastructure to support a holistic view of customers’ fiat and digital accounts, banks ensure their organizations will be at the industry forefront in delivering innovative, immersive customer experiences.
If there’s any lesson that banks and financial services organizations have learned in the last two years, it is that they need to be resilient and ready for change. The metaverse is that change. It’s where banks must learn to adapt to meet younger consumers where they are or risk being left behind.
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