Metaverse: Any bank that is 'establishing a presence’ is doing it for PR

Digital Reinvention Community
Q+
06/07/2022 Interview
Alex Jimenez EPAM Managing Principal

Alex Jimenez, Managing Principal at EPAM's Financial Services Consulting, shares his perspective on the relevance and financial market potential of the metaverse.

Why would an industry that is not entertainment based invest so much in establishing a presence in the metaverse?

Before we even attempt to answer that question, we need to define what we mean by metaverse.  The most agreed upon definition is that of a 3D virtual world, where our avatars can have experiences that are entirely digital. Often, we talk about metaverse as if there was a single agreed upon virtual world, but that doesn’t exist. JP Morgan, for example, opened a ‘lounge’ in the blockchain-based Decentraland. Similarly, Fidelity opened the Fidelity Stack, a ‘gamified financial education experience,’ also in Decentraland. Meanwhile, Industrial Bank of Korea (IBK) is planning to enter the Cyworld metaverse platform. Yet, the more successful metaverses exist in gaming such as Minecraft, Fortnite, WoW, or other multi-player immersive platforms.

Financial institutions should be examining ‘the metaverse’ and Web 3.0 to be ready to engage when it makes sense. At this point, any bank that is ‘establishing a presence’ is doing it for PR more than anything else.

More interesting than the metaverse are other opportunities within Web 3.0, particularly around blockchain, such as crypto, assets, and asset management.

In the past two years, cryptocurrency has become more mainstream with a larger number of people investing not just on bitcoin but all matter of cryptocurrency. It is no coincidence that one of the trends in advertisements during this year’s SuperBowl was cryptocurrency. It is a clear signal that tokens are no longer limited to the tech savvy. 

Another sign of the mainstreaming of crypto is the move by run-of-the-mill banks and credit unions announcing partnerships with fintechs to hold crypto for mass market customers. Beyond such direct crypto engagement, there is a growth of digital assets such a crypto EFTs, stablecoins, and now NFTs.

NFTs may or may not be the future of digital assets. However, as competing multiverse platforms have sprung up, virtual real estate, as well as all manner of NFTs from art to virtual luxury goods, have begun to attract investments. While traditional FIs may scoff at these new asset classifications, they should be at least aware and not get caught missing out on the opportunity to be able to support and advise their clients.

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