Today during a panel at the SIBOS banking event, the range of metaverse definitions became apparent. Some think of the metaverse as gaming, while others consider it a more diverse 3D experience. HSBC sees it as the convergence of the digital and the physical world, including the time we’ve spent online during the pandemic.
Mike Abbott from Accenture explored some of how banks are using the metaverse. In Korea, Kookmin Bank (KB) is launching virtual branches where customers can talk to financial advisers. Accenture recently conducted a survey with tens of thousands of banking customers worldwide about whether they’d want to speak to their bank in a virtual world. More than half said yes. So interfacing with clients is one potential application for banks.
He acknowledged that while JP Morgan and others have started their metaverse presence, “without people, a branch is an empty location. It’s absolutely nothing. So the metaverse needs a population,” said Abbott.
Accenture has set an example of how to populate virtual worlds. Since the start of the pandemic it has onboarded 150,000 employees using its metaverse experience.
Bank of America is using virtual reality to train 50,000 employees. Apparently, that even includes preparing for a bank robbery, which is more useful in an ‘immersive’ environment. So employees using the metaverse for collaboration is a second application.
Interfacing with clients and employees is really using it as a communication channel. Where’s the money?
The market capitalization of virtual land in web3 metaverses amounts to billions of dollars. So real estate finance is one potential business model. However, we’d observe sales are already being re-financed, which is happening in DeFi, not via banks.
Another application is payments.
Abbott said that every bank asks how they can dominate payments in the metaverse. “It’s the absolute wrong question to ask,” said Abbott. “Payments in the metaverse, or payments for that matter, anywhere is not about paying, it’s about being paid. It’s how do you accept payments on the other side?”
He continued, “you’re not gonna scale this industry by thinking any individual bank is going to dominate.” Instead, it needs collaboration on standards.
HSBC’s metaverse, web3 learning
HSBC’s Catherine Zhou spoke about web3 in a similar vein. She distinguished between the Web3 economy and service providers. HSBC wants to be an “ecosystem platform provider to power up the Web3 economy rather than compete with the economy,” said Zhou.
The key distinguishing feature of web3 is users control their own identity and data, and the ability for users to create value.
She made some recommendations about what not to do in web3, which is to avoid porting web2 experiences. For example, she considers a digital wallet a web2 phenomenon. In web3, she expects payments to happen on a (virtual) handshake or in the blink of an eye.
HSBC bought land in The Sandbox metaverse and has learned to pay gas fees. And now that Ethereum has moved to proof of stake with validators rather than miners, Zhou asked a very banker-like question: “How do we actually validate the validators? What if they’re in North Korea?”
And learning by doing is priceless.
“If there’s one thing to take away from this, it is to really play the game fast and learn and fail fast. And keep pivoting,” said Zhou. “And don’t sit there and watch the game. Play the game.”