Faster processes, an attractive customer experience and lower operating costs – the metaverse holds enormous potential for banks and insurance companies. In the race to sustain its image as the most future-oriented and forward-thinking sector, financial institutions need to quickly embrace the changes and work towards developing a fail-proof metaverse strategy that set them apart from the pack.
The metaverse has promised a very intriguing future for many financial players, but how is this going to be achieved and why are so many buying into the technology? Kunal Purohit, the chief digital services officer at Tech Mahindra, an Indian multinational information technology services and consulting company, dissects how different regions have responded to the metaverse differently and what makes it so appealing.
Purohit has over 20 years of experience distributed equitably over roles in the corporate office and the field. In his most recent role before joining Tech Mahindra, he was leading HCL‘s Digital Business and Practice in Europe and was based out of the UK. He has also spent considerable amount of time leading HCL’s Corporate Strategy office, and worked with the CEO and the board to enable strategic decisions around organic and inorganic growth of the company.
Using his expertise, Purohit told The Fintech Times about the benefits of the metaverse:
According to Bloomberg Intelligence estimates, the metaverse market‘s revenue is expected to grow to $800billion by 2024. In tune with the changing times, it is the beginning of a new era for financial services. JP Morgan, the largest bank in the USA, has already taken the first step and opened a branch in the metaverse. In just one location, the financial institution can now serve millions of customers without maintaining a physical presence.
In addition to a smooth customer journey, greater employee satisfaction and savings on operating costs, going virtual offers immense benefits. For example, with a metaverse presence, banks and insurance companies can drive their digital transformation without having to invest in physical spaces, while at the same time, they position their brand as future-oriented and innovative.
For many companies, the metaverse is uncharted territory, but the tide seems to be turning in the right direction. Immense opportunities await banks that ensure that their core IT is modular and digitally ready to interact in the metaverse. Not only does the advisory process take place in the virtual world, but concrete transactions and the upselling and cross-selling of new products can also be carried out in the metaverse.
There are already ample examples of banks using money earned in the form of points in online games as a mortgage to lend real money.
Data management – the key to success
Crucial to the presence in the metaverse is the banks’ ability to structure and analyse a variety of data and then use it across channels when dealing with customers. Efficient data management and the elimination of internal silos are crucial to enable a smooth transition.
So when looking at the various components required for a migration to the metaverse, it quickly becomes apparent: the metaverse requires computation, machine learning and other database and security services that are inextricably linked to cloud computing. For example, as more and more storage and computing power is needed to support a virtual reality universe, remote computing in the cloud will be the only cost-effective way to solve this challenge.
Moreover, data is the foundation for everything that happens in the metaverse.
As more people and businesses participate in this virtual universe, the need for data and data processing will only increase. A cloud is also needed for redundancy and high-bandwidth transmission of pixel data for believable experiences in the 3D world. Also, to enable data protection, security, reliability and scalability, the comprehensive functionalities of cloud technology are essential. To top it all, cloud-based software hardly requires any hardware investment and offers the greatest possible flexibility through pay-per-use.
GCC markets are in tune with the dynamics
There is a great deal of interest from the finance sector in the Middle East, a region known for its early adopter status in technology and automation. Cloud computing is already in progress in many cases and the adoption of the metaverse is imminent.
According to a TRENDS MENA study, metaverse is set to transform banking in the GCC. The use of metaverse in banking may lead to the emergence of fully digital bank branches, reducing or even eliminating the need for physical ones. A Kuwait-based bank recently became the latest corporation from the Middle East and North Africa to enter the metaverse. The bank now holds two sites in the metaverse, one on Decentraland and another one on Sandbox.
Governments in the region are spearheading the adoption of the metaverse. Saudi Arabia announced billions of dollars of investment in advanced technologies earlier this year. To facilitate growth in the metaverse, the UAE Government recently approved a digital economy strategy that seeks to double contributions by this sector to its GDP from 10 per cent to 20 per cent over the next 10 years.
In tandem with this development, Dubai recently announced the launch of its metaverse strategy, which aims to foster innovation in new technology. Dubai has over 1,000 companies operating in the metaverse and blockchain sector, contributing $500million to the national economy.
With the early adoption of metaverse, Dubai aspires to become one of the top 10 metaverse economies and a global frontrunner in adopting digital solutions. The Government of Dubai has estimated that the metaverse could add as many as 42,000 virtual jobs and upwards of $4billion by 2030.
In December 2021, the Abu Dhabi Investment Office (ADIO) and Mubadala Investment Company signed a preliminary agreement with Roborace to accelerate the development of the mobility sector by using autonomous technologies and metaverse infrastructure to facilitate faster and wider adoption of these innovations.
Such impressive developments only point toward the next big revolution in the making – the metaverse, which has the power to take the digital customer experience to newer heights. After all, customers would be highly excited about being the digital avatars of themselves to interact, explore and access services in the digital world and experience newer realms of banking.