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Banks may find opportunity in the metaverse

August 24, 2023

Banks may find opportunity in the metaverse
Metaverse banking may yet come into its own, but for now the risks are greater than the rewards. Over the last four years, many financial services providers (FSPs) including Mitsubishi UFJ, PayPal, and Citigroup have shown interest in the metaverse. Some have even bought virtual land to build interactive experiences inside metaverse hosts like Decentraland, hoping to drive customers to their real life offerings.

The problem with this, as a new GlobalData report suggests, is that the userbase of metaverse products has dwindled since its heyday in 2020. Alongside that, the virtual land, that costs real money, fluctuates in value based on the cryptocurrency it’s tied to, making it volatile. Despite this, prices for such land remain surprisingly high, with the cheapest parcels in Decentraland available currently costing around $1000.
 
Additionally, many of these experiences simply pushed users to the websites of the banks or informed them of new products, raising the question of whether the advertising budget could not have been better spent through more traditional channels.
 
A few FSPs have provided more unique offerings. US bancorp Ally Financial worked with college students to create a Minecraft world called Fintropolis, an educational tool for children that gamifies financial education on fraud, savings and stocks among other topics.
 
Singaporean bank DBS launched a world in The Sandbox, a similar service to Decentraland. SingaporeVerse was a virtual world showcasing their Environmental, Social and Governance efforts – though banks may face backlash against such creations due to the large ecological costs of hosting blockchain-based applications.
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