A financial technology startup, Signzy, has recently been granted a patent to facilitate a variety of banking transactions in the metaverse, including general inquiry services, netbanking services, loan services, and such. However, technology and financial experts think that while banking in the metaverse has potential, it doesn’t sound very appealing at the moment. “Virtual Reality/Augmented Reality (VR/AR) applications will free up essential resources in the real world and lead to leaner organizations, but execution of this strategy is key,” Vikrant Ludhra, cofounder of financial services startup Alternative Path, told Lifewire over email. “For the near future, some of these [metaverse-centric developments] will be pure gimmick.”
FOMO
According to the 2021 edition of the Digital Banking Report, 34% of the surveyed bankers believed that about a fifth of their customers will use VR/AR as an alternative channel for daily transactions by 2030. Ludhra believes banking in the metaverse has the potential to bring about massive innovations and growth in terms of acquiring young, tech-savvy customers and augmenting physical locations by providing ease of use for existing customers. He suggested that traditional banking offers an emotionally detached experience, especially for the younger generation, which could be addressed by the metaverse and its promise of creating meaningful connections while being physically separated. “Adoption of these technologies will be more by the younger generation as they tend to try out new things and experiences more than the older demographic who still prefer in-person human interactions over the virtual kind,” reasoned Ludhra. In a PR email, Signzy argues that with the onslaught of VR/AR, the next evolution of banking will dissolve the boundaries between offline and online banking in unprecedented ways. “The metaverse offers a huge growth opportunity to attract young customers, and many even pave the way to creating new product lines and eventually add newer business models,” Signzy cofounder Ankit Ratan noted in the PR.
Virtual For Virtual
Karthik Ramamoorthy, Project Manager Automation at S&P Global Market Intelligence, isn’t sold on the idea of banking in the metaverse. He told Lifewire over a Skype call that banking in a virtual world had been attempted in the past in Linden Labs Second Life virtual world. A few banks had set up shop inside Second Life to help customers manage their money from within the virtual environment. “In its current state, banking in the metaverse appears to offer no added advantages,” opined Karthik. Gaurav Chandra, CTO of LGBTQ+ social network As You Are, echoes the same sentiment. In an exchange over LinkedIn, Chandra explained that in practice, a metaverse bank would eventually have to interface and communicate with a physical bank, which offers no real advantages or functionality over the existing system. Ludhra however believes banking in the metaverse is about digital worlds, with digital decentralized peer-to-peer assets and transactions, which have existed for a long time but have once again come into the spotlight thanks to Meta. “The grant of this patent to Signzy opens up many exciting opportunities for financial services delivery in the metaverse, covering both traditional banking services and those involving digital and cryptocurrencies. Further, our technology supports both existing products, as well as products that are yet to be invented in the future for metaverse,” said Arpit Ratan, another cofounder of Signzy. Signzy believes the metaverse’s burgeoning economy represents opportunities for banks to devise new products, such as lending against virtual assets and cryptocurrencies. “While some people would go for experimental financial assets and this tech might help but with rising uncertainty, people generally gravitate towards safer tangible assets and derivatives of such assets,” stressed Ramamoorthy. On top of this, Chandra believes the one important issue that still needs to be addressed is security. “Metaverse is a novel concept, but we do not know about the robustness of the systems,” he warned. “In my opinion, till the time a third-party independent audit is done, metaverse is a dangerous place for financial transactions.”
