Banks Enter the Metaverse
DBS BetterWorld: interactive metaverse experience
DBS Bank is now the first Singapore bank to create an interactive metaverse experience. With Ethereum-based decentralised virtual gaming world The Sandbox as its official partner, DBS Bank will acquire a 3x3 plot of LAND within The Sandbox metaverse.
This metaverse experience—also known as DBS BetterWorld—will be developed with immersive elements such as architecture, flora and fauna. Once completed, members of the public, including non-DBS customers, will be able to experience DBS BetterWorld free of charge.
DBS Bank hopes to utilise the platform to raise awareness about pressing environmental, social or governance (ESG) issues. An example is the profiling of social entrepreneurs in Asia who have been making a positive impact through innovative business models. Together with The Sandbox, DBS Bank will purchase carbon offsets in order to ensure that the land as well as production of DBS BetterWorld is carbon neutral.
Traditional banks entering the Metaverse
Traditional banks are feeling the pressure of FinTech. In order to maintain relevance in this rapidly digitalising economy, they are coming up with innovative ways to incorporate FinTech into the traditional banking system. DBS Bank Chief Executive Officer Piyush Gupta acknowledges this fact during the partnership announcement: “metaverse technology, while still evolving, could also fundamentally change the way banks interact with customers and communities.”
The financial sector has been undergoing a colossal shift in the past decade, with FinTech shaking things up on all fronts. The recent venture by DBS Bank shows how keen traditional banking institutions are to expand into FinTech through collaborative partnerships.
DBS Bank is not the only global bank seeking to enter the metaverse. Earlier in March this year, HSBC announced its intention to purchase virtual real estate in The Sandbox metaverse. Due to its heavy involvement in sports, HSBC will feature a “Sports Zone” to connect with sports, e-sports and gaming enthusiasts. There will also be a section of the virtual space showcasing HSBC’s brand history.
Besides The Sandbox, which is a subsidiary of Animoca Brands, banks are also exploring other metaverse platforms. JPMorgan Chase launched its virtual Onyx Lounge in Decentraland—a browser-based 3D virtual world in which plots of land are available for purchase in the form of NFTs. Users can find the Onyx lounge located in Metajuku, a virtual version of Tokyo's Harajuku shopping district.
Regulatory concerns about the Metaverse
It is undeniable that the metaverse—a virtual community where we can do business, have fun, and make friends—presents an abundance of opportunities. Seamlessly converging our physical and digital lives, the metaverse is likely to infiltrate all sectors including banking and finance. Its market opportunity is estimated to be over $1 trillion in yearly revenues.
However, along with its unbounded potential, the metaverse gives rise to numerous regulatory concerns. The strict regulations which bind financial institutions such as anti-money laundering (AML) and counterterrorism funding (CTF) policies are not yet present in the metaverse. Thus, in this relatively unregulated space, there are serious compliance risks.
One huge concern in particular is identity management in the metaverse. Avatars used to interact within the metaverse must be accurately traced back to actual individuals. How will the banks be able to conduct Know Your Customer (KYC) checks and verify identity? All of these tricky issues still have to be ironed out.
Are you ready to take on the metaverse?
The metaverse is the next generation of the Internet which banks as well as other companies cannot afford to ignore. Organisations have to carefully consider their target demographic in order to arrive at their ideal level of involvement in the metaverse.
Here are some relevant questions to ponder on: Do your competitors have a brand presence in the metaverse? Which key experiences and services of your company can be offered in a virtual ecosystem? Are your employees prepared to work and collaborate virtually? Take your first steps into the metaverse; the future is already here.
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