" class="no-js "lang="en-US"> EXCLUSIVE: "De-hyping the Metaverse" - Jieke Pan, Mobiquity in 'Discover Sibos 2022'
Tuesday, December 06, 2022

EXCLUSIVE: “De-hyping the Metaverse” – Jieke Pan, Mobiquity in ‘Discover Sibos 2022’

Jieke Pan, CTO and VP of Engineering at Mobiquity considers what banks are doing now and what they should be doing to reap the benefits of a virtual world

On June 26, 2000, the first draft of the human genome was released to the world. Seven years later, on June 29, 2007, the iPhone was unveiled. While both events promised to transform our lives, it’s probably fair to say that, to date, only the smartphone has delivered on that for most of us.

Thus far, it’s unclear whether the rebranding of Facebook to Meta on June 9, 2021, will be more akin to our experience of genomics or the smartphone. Nonetheless, it prompted many more of us to wonder what the metaverse actually was. Interest in the technology spiked at the Facebook Connect event in October last year when the company outlined its vision for the metaverse as the natural successor to the mobile internet – a veritable ‘set of interconnected digital spaces that lets you do things you can’t do in the physical world’.

After that announcement, the metaverse market was predicted to reach $800billion by 2024. Is that hype or substance? Is the metaverse just another attempt to rehash the same technologies that failed when launched via the likes of Second Life?

Maybe we ought to start by looking at what the metaverse is (and what it is not). In Navigating The Metaverse, UC Berkeley’s Tommaso di Bartolo provides a good summary. He defines it as ‘the next generation of consumer engagement: an immersive experience with a self-sustaining, community-driven economy at its centre. It’s a new digital reality for consumers, empowering joint value creation: to build empathy with brands by becoming part of the product’.

“The only way technologies in the banking sector are likely to succeed, is if they become an essential component of the financial services tech stack”

Given the nascent nature of the technology, there are understandable comparisons with the early days of the internet. For every Jamie Dimon, who stated that the metaverse represents a $1trillion opportunity as JPMorgan Chase became the first major bank to develop a presence in it, there’s a market sceptic. Indeed, for all the talk around consumer engagement, a survey in February 2022 found that around half of Americans didn’t even know what it was.

Nevertheless, Mobiquity’s recent research found that 75 per cent of banks in the United States and more than half (56 per cent) in the UK are actively engaging with metaverse technologies. Perhaps understandably, larger banks are more active than smaller firms, with most believing that the metaverse will help them reach their customers. JPMorgan was the first in with its Onyx Lounge, which was launched to provide a practical demonstration of the kind of benefits the technology could provide. In its report, Opportunities In The Metaverse, the company sets out its expectations that the metaverse ‘will likely infiltrate every sector in some way in the coming years…

As a result, we see companies of all shapes and sizes entering the metaverse in different ways, including household names like Walmart, Nike, Gap, Verizon, Hulu, PWC, Adidas, Atari and others. Business leaders and boardrooms around the world are now asking themselves, ‘what is my metaverse strategy?’. For Bank of America, it’s to use virtual reality as part of its training, with the aim of providing more than 50,000 employees with a platform to practise a wide range of simulated client interactions.

“Virtual reality (VR) is highly effective at helping teammates build and retain new skills and it is one of many ways we are using technology to support internal mobility and provide best-in-class learning opportunities,” the company says.

French bank BNP Paribas has long been an advocate of VR-based services, and its first foray into the metaverse has come via something it refers to as W.I.R.E.D. (Wearable Immersive Real Estate Dataroom). This is a digital twin that provides an accurate replica of an actual city, which allows the company to look at the way in which cities evolve. For instance, W.I.R.E.D. will allow users to explore various European neighbourhoods, complete with qualified data for each property.

“The transaction business is changing; technology is supporting the transformation, and W.I.R.E.D. is a perfect example. This immersive tool will allow us to better respond to our clients’ questions and needs,” explains Eric Siesse, deputy general manager of BNP Paribas Real Estate Transaction.

Meanwhile, British bank HSBC made its first move into the metaverse via The Sandbox virtual community. The financial services group has bought aplot of virtual real estate in The Sandbox that the company will use to engage with users on the platform. Ultimately, HSBC believes that the metaverse will eventually become the main way of interacting with the company in the Web 3.0 era, with a wide range of new customer experience opportunities opening up as a result.

AN ESSENTIAL COMPONENT OF THE TECH STACK

As research from ETH Zurich illustrates, use cases like these can often be crucial in helping us to understand new technology, but the breadth of applications being tested out by banks suggests no ‘killer app’ has thus far been stumbled upon to help pinpoint areas for the more cautious among us to follow. The reticent will no doubt point to the considerable hype that surrounded Second Life, with advocates urging companies to set up virtual showrooms to engage with consumers in this new and exciting platform, only for it to fail to take hold and provide a poor return on those investments.

The only way metaverse technologies in the banking sector are likely to succeed, is if they become an essential component of the financial services tech stack. We’ve already seen Cloud technology reach that stage and it is now a central part of most financial companies’ IT systems. But it remains uncertain whether the metaverse will even come close to replicating that level of transformation.

This perhaps explains why the initial forays into the technology by the major banks have been at an application level, rather than a systems level. In other words, they have begun their metaverse journey by doing what they already do in a slightly different way, rather than using the technology to fundamentally change how they operate.

SYSTEMS CHANGE

Back in 1990, American management consultant Michael Hammer famously wrote in the Harvard Business Review that we won’t get the benefit of computers until we re-engineer the way companies operate to capitalise on the capabilities they offer. Since then, there has been an understanding that generational technologies tend to start their journey by, to coin Henry Ford, giving us a faster horse, before they eventually provide real value by reimagining what is possible. In their latest book Power And Prediction, Ajay Agrawal, Avi Goldfarb, and Joshua Gans highlight this by outlining the three core ways in which technology can be used.

  •  As a point solution, which is when an existing procedure is improved upon. It can be adopted independently and doesn’t require the system within which it’s embedded to be changed
  • As an application solution, which is when a new procedure is created and adopted independently. This also doesn’t require any changes to the system in which it’s embedded
  • As a system solution, which is when existing procedures are improved, or new procedures are created, by changing dependent procedures

SEIZING THE OPPORTUNITY

It’s perhaps no surprise, therefore, that it is in the smaller fintechs where this is initially playing out, developing a banking system to facilitate the exchange of goods and services from virtual worlds into the real world and the first bank specifically designed for the metaverse. Startups have no legacy systems to deal with so they can build from scratch something designed specifically with the virtual world in mind. If we are to truly realise the opportunity that the metaverse presents, then it’s clear that much more significant implementations of the technology will be required than we have seen to date.

There is a clear sense from banks that they believe that the metaverse will provide valuable new ways for them to engage with customers. In our increasingly hybrid world, this could be more important than ever, removing friction in the customer experience by augmenting physical environments.

At Mobiquity, the idea is to look at the issues customers are facing now, and how they can be alleviated effectively and efficiently, whether that’s through using metaverse technology or not. The end game for metaverse technologies should be going beyond the hype – shifting the virtual experience from connecting people to people, to connecting people and places: Web 3.0.

Before banks jump in to implement metaverse technology, they need to ask themselves if there’s a necessity for the technology to solve a specific challenge, to create a positive impact, or improve existing systems.


 

This article was published in Discover Sibos 2022, Page 25-26

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