With the ever-broadening scope of cryptocurrency in 2021, the market still is highly volatile because it is excluded from the mainstream financial market. However, a great transition is about to happen as the new internet generation of the rising metaverse is about to infiltrate the market. This innovative technology that encompasses AR, VR, and other immersive technology will bring to regulation and wide-scale adoption and stability of cryptocurrencies. 

With no evidence that the metaverse will stop its momentum, financial institutions should act on preparing and planning for the integration of crypto and the metaverse into their business models and services, or they will be left behind in the economy. Furthermore, these companies will be guided by the large customer bases and long-established brands of banks as they move towards a metaverse economy run by cryptocurrency. 

In 2020, the retail sales of the metaverse economy were equivalent to $20 billion, with an increase of 40% a year in crypto and stablecoin transactions. Although most of these transactions were mostly on virtual luxury fashion items or digital art, this signals the boost of digital asset use as a store of value. The increase in the use of digital assets in the metaverse means greater use for people in paying for goods and services, sending money between family and friends, or backing up real-world assets. This emerging use of crypto in the metaverse is one of the arguments that will lead to cryptocurrency regulation. When this happens, it will result in a more stable crypto market and integration into the mainstream financial system. 

 

However, banks should be proactive and not reactive when it comes to waiting for regulation in the new metaverse economy. Here are some ways in which banks should deal with the metaverse economy. 

Connect with Customers through VR and AR Platform Integration

Companies exist because of customers. Companies should not only focus on creating platforms to be used to pay in the metaverse economy. They should also strategise on how to make their brands known to the public and how to provide better services to clients. AR and VR technology could be integrated to better serve clients and communicate with them better. For instance, clients can use VR glasses instead of just a phone app to perform banking and finance in any part of the world. 

It should serve as an eyeopener to banks and financial institutions that many people spend time on metaverse platforms. These could include spending time watching real-estate sales channels, enjoying virtual concerts, or relaxing through video games. The use of AR technology is immersive and visual, which implies that there will be avenues for advertisements—including partnerships with celebrities, digital billboards, or avatars that communicate to potential clients. For newbie traders and seasoned ones, it would not hurt to learn more about updates on the cryptocurrency market.

Build on Trust and Brand Recognition

Banks belong to institutions with the highest trust levels. Most of those who answered surveys attest that they trust banks and financial institutions better than the government. Thus, banks have a great opportunity to cater for the general public’s increasing crypto interest and store value in digital assets. A startling piece of information is that it is not only the millennials and Gen Z who are using crypto to pay for goods and services; an estimated 45% of crypto owners belong to the baby boomer generation. Regardless of age group, an investor should know how the cryptocurrency market works. While numerous platforms show crypto investors how it works, there are also automated system websites such as crypto-engine.org, which welcome users to a reliable broker that can assist them on their trading using its advanced trading technology.

As of the present, companies can assist as long as it is within the bounds of the law. Mastercard now handles crypto payments. This showcases that the demand to use crypto is being catered by a traditional financial institution yet still restricts it within the brand and network. In addition, the US Bank recently offered custody services that show a goal to store bitcoin-related funds with its name backing it up. 

Banks will slowly transition to the future financial market as it deals with crypto payments and provides custody services. In addition, banks can also deal with digital assets such as equity trading and mortgages and loans. 

Banks have another opportunity to leverage their brands through user verification and risk management. This is particularly true as more individuals depend on peer-to-peer cryptocurrency transactions and as people want to feel secure when they deal with payments. 

Support and Adopt Metaverse Payment Platforms

With the current expansion of the metaverse and its shopping choices, there is also a need to expand the number of digital platforms to process these transactions. For instance, Meta, which is the new brand for Facebook, piloted a program that permits the use of Whatsapp to transfer value from a digital wallet to others and send cross-border transfers without extra charge.

Financial institutions should grab the opportunity to provide these platforms or assist their clients in using these by opening up bank APIs to permit investors to connect their bank accounts to payment platforms. However, these platforms will not be restricted to phone or laptop screens. Rather, these different VR and AR systems will be integrated to form the metaverse. 

Banks operate in the traditional fintech world by backing up payment apps that do not have their banking licences. Similarly, banks would be at an advantage when they strategise this way with the metaverse. Banks could never do away with metaverse as large transactions happen within the system.  

Conclusion

The metaverse is still a growing industry on its own, with lots of uncertainties that surround it. However, it is impossible to predict what it will look like or how it will affect the world. For banks and other financial institutions, the best way or strategy is to be proactive and not wait for regulation. When banks are willing to participate in the crypto and metaverse economies, use their brand recognition and trust, and meet the needs of their clients, they will go a long way in the journey to a crypto-fueled metaverse economy. 

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