Apple introduced the Vision Pro, a headset that blends virtual reality (VR) and augmented reality (AR). Apple CEO Tim Cook said the device is "the first product you look through, not at." The product is seen as Apple's next move to bring the metaverse to life.

The metaverse represents a convergence of VR, AR, blockchain technology, and social connectivity, creating a dynamic environment where people can interact, transact, and build communities. According to McKinsey, well over $120bn in investment has flowed into the metaverse in 2022. It's projected the metaverse to generate $5 trn in value by 2030. The metaverse is expected to reshape all industries, and the finance sector won't be an exception.

Imagine entering a virtual bank branch as an avatar, acquiring virtual assets, and participating in a financial ecosystem that seamlessly integrates with the metaverse and the real world. All of these might become part of our daily life as metaverse companies are working with banks to explore the future of finance. They are reimagining banking services and reshaping the way we store, manage, and exchange value.

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Working with metaverse companies: what's in it for banks?

One of the major objectives for banks and financial institutions experimenting in the metaverse is to improve customer experience and optimize user engagement. According to McKinsey, consumers are already investing significant amounts of time and money in immersive technologies like VR and AR, and the metaverse is seen as the next level of this trend. Capgemini Research Institute reports from a survey that 77% of consumers stated more interactive experience would help them make better purchase decisions. Banks hope metaverse technologies will provide their users with a more immersive, interactive, and personalized banking experience.

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Aside from customer engagement, experimenting with finance solutions in the metaverse helps banks tap into new revenue streams, increase operational efficiency, and improve access to financial services for individuals and SMEs. It also provides them with a unique platform to differentiate themselves through innovation, enhance their brand image, and position themselves as leaders in revolutionizing the future of finance.

Peeking into the future of finance: what banks are entering the metaverse?

• JP Morgan

In 2022, JP Morgan became the first bank to enter the metaverse, according to FinTech magazine. It opened a lounge in Decentraland, one of the most popular metaverses. The lounge, named Onyx, is inside the platform's Metajuku virtual mall. And it gives visitors information about blockchain and other technology-driven initiatives the bank is participating in. There's also a tiger roaming the first floor, overlooked by a portrait of the bank’s CEO Jamie Dimon.

• CaixaBank

CaixaBank, a Valencia-based bank, opened a site in Decentraland for its digital financial lifestyle offshoot, Imagin. The 3D-modeled version of imaginCafé in the metaverse is situated within the bustling Forrest Plaza district. Users can access it by using a link or QR code from their digital devices.

BPI, CaixaBank’s Portuguese subsidiary, opened its VR Branch. The bank now offers virtual experiences for customers, including banking and contact services, making it the first of its kind in Portugal. Customers can walk through the branch's two floors, learn more about BPI's offerings, and enjoy entertainment features by using Meta's VR headset.

This year, CaixaBank celebrated "World Earth Day" through virtual reality, hoping to raise awareness of sustainability. Customers participating in the experience were able to virtually explore forests, beaches, and the deep sea to complete missions for protecting the environment.

• HSBC

HSBC, a Hong Kong-based bank, bought a plot of digital land in The Sandbox gaming platform in 2022. The land was going to be developed to engage and connect with sports, esports, and gaming enthusiasts. HSBC said the metaverse allows it to "create innovative brand experiences for new and existing customers."

• KB Bank

South Korea's KB Bank has worked with ShareBox, a VR content developer, to open a virtual branch in the metaverse. The virtual branch consists of an entrance, a VIP lounge, and a main hall. And the main hall is where customers can access personalized financial information. The branch can also be used to educate young people on finance as well as train employees.

Expert opinion: challenges ahead of the future of finance in the metaverse

By Maximillian Jungreis, Head of Crypto and Digital Assets at Plug and Play Ventures

It's critical to recognize and take on the difficulties that will face banking when it works with metaverse companies. While the combination of VR and AR technology presents intriguing prospects, several significant challenges must be overcome before metaverse banking can become the future of finance for all of us.

Security and trust: As with any digital platform, it is paramount that banks prioritize the security of client information and make sure the metaverse is protected by reliable cybersecurity solutions. Given the possible risks involved with virtual transactions and asset management, developing user trust will be essential. Watch this video to learn more about addressing security in Web3:

Regulatory environment: The metaverse's regulatory framework is still developing. Banks will need to work with regulatory agencies to build rules and guidelines relevant to metaverse companies as they explore this new territory. Regulatory clarity is crucial to ensure compliance, consumer protection, and the avoidance of financial crimes in virtual financial ecosystems, just like with the entirety of the digital asset ecosystem.

Interoperability and standardization: One of the most widely-discussed benefits of this metaverse concept is a diversified ecosystem that is decentralized and composed of several different platforms and technologies. For seamless and effective banking experiences, ensuring interoperability and standards across various metaverse contexts will be essential. To create uniform protocols and standards for financial transactions and data interchange, banks must work with industry stakeholders and metaverse companies.

User experience and accessibility: Metaverse companies offer rich and dynamic experiences, but it's crucial to make sure that the banking services available within the metaverse are user-friendly, inclusive, and accessible. To achieve widespread adoption and usability of metaverse banking services, it will be essential to provide user-friendly interfaces and support people with different abilities.

Infrastructure and scalability: It is anticipated that user demand for the metaverse will rise quickly. Banks must invest in scalable infrastructure to accommodate the surge in customers and guarantee a flawless experience. This includes the ability to handle a large number of transactions and interactions in the metaverse, as well as reliable server capacities, low-latency networks, and effective data processing capabilities.

Education and digital literacy: As metaverse banking develops, education and digital literacy activities will be necessary to ensure that users know how to utilize these platforms safely. Banks may play important roles in educating customers about metaverse banking, encouraging responsible usage, and raising knowledge of potential risks and best practices.

The use cases we see from multiple banks offer us a peek into an exciting future where banking is decentralized, personalized, and immersive. Nonetheless, collaborations between banks, metaverse companies, regulators, and other stakeholders will be necessary to address potential issues. The finance sector can unleash the full potential of the metaverse and revolutionize the future of finance by working together to tackle these challenges.