Financial Services (FS) institutions are no strangers to artificial intelligence. From virtual customer service to compliance automation and fraud detection, the FS industry is harnessing AI for both internal and customer-facing activities. But AI holds the potential for more in the future: It can also help lead the FI industry into the metaverse.
From computer-generated characters to machine storytelling, the metaverse already has deep AI potential. Meanwhile, Financial Services institutions are venturing into the space. In early 2022, JPMorgan opened its first virtual branch in Decentraland, where users can trade non-fungible tokens (NFTs) or cryptocurrency to buy virtual plots of land. In the months that followed, HSBC and Southeast Asia’s DBS Bank both announced plans to buy virtual plots in The Sandbox.
For the Financial Services industry, these two threads – AI and the metaverse – are converging fast.
Virtual Benefits, Real ROI
Imagine a world where customers want to convert fiat currency into crypto so they can buy and sell virtual assets, securing non-fiat loans to do that. If NFTs, virtual land and other web3 assets become meaningful investments within a diversified portfolio, financial institutions may eventually create mutual funds to enable it.
That full picture might still be years away, and some elements could stall out before viability. Real revenue opportunities exist in this decentralized future. According to a survey conducted by Infosys, nearly 30% of C-suite banking executives expect metaverse revenues to accelerate within the next decade
Hence, there’s considerable desire today to adopt these formats. As per the same research, approximately 30% of respondents are already investing in digital currencies. Approximately, 52% said they need to prioritize digital currencies and 50% said they need to prioritize digital assets. About 46% are already investing in digital assets, and almost 34% already investing in blockchain.
Similarly, Infosys’ Digital Radar report found most companies are already adopting digital initiatives, including artificial intelligence (73% adoption), Blockchain (71%) and augmented or virtual reality (63%).
AI-Enabled Use Cases in Financial Services
Given the need for AI across the sprawling world of web3, related applications to the metaverse are inevitable. KB Kookmin Bank, a leading financial institution in FI South Korea, has tapped into with a VR-enabled banking experience that enables one-on-one consultations between customer and employee avatars. Kookmin also offers employee training through its virtual bank, not the first time a major company announced training on the metaverse.
Virtual banking in a three-dimensional environment introduces a new generation of white-glove treatment, with real customers’ digital twins getting personalized customer service from anywhere in the world. Another fine example of how banks leverage metaverse is how interns at a leading digital bank developed a financial learning experience game to educate the masses about financial literacy via metaverse. This game consists of characters that guide players while they learn about investing in stocks and shares, cash flow and budgeting, to how taxes work and how to buy a home.
As per the Infosys survey, nearly 46% of the C-suites claimed that creating an immersive learning experience using metaverse was a priority, while 62% considered tailored experiences for customized financial advice and using AR/VR channels to conveniently make transfers, checking balances and making payments as equally important.
That will require a mix of AI enablement and human-powered services, depending on services rendered. The medium of transactions takes it one step further, with AI enabling decentralized ledgers and smart contracts with specific application logic – all elements of finance in the new paradigm.
Building a Long-Term Future
There is a need to take a deep breath. The metaverse is still in the first phase of Gartner’s hype cycle, after all, with an anticipated 10-plus years until it reaches sustained productivity. As such, institutions should develop long-term roadmaps that emphasize clear use cases, not mere flag-planting. Banks aren’t going to wake up tomorrow to everyone throwing on an Oculus to chat NFTs with their financial advisor.
Banks also need to overcome various hurdles if they want to leverage metaverse. The need to acquire necessary skills (46%), customer privacy (45%), identity management and authentication (41%) and finally cybersecurity and cyber resilience (38%) as their main challenges according to Infosys research. Nearly 33% of respondents also mentioned the need for parity between big tech and regulated banks, along with 32% being concerned about governance and regulations – are serious issues that are yet to be addressed.
Despite all the ordeals, financial institutions need to devote serious and considerable thought to the metaverse, as it represents a paradigm shift for users and potentially the entire financial ecosystem. The industry is staring at an AI-enabled journey into the disintermediated, open-source world of web3. And the metaverse is at the ground floor of it all.