Banking in the metaverse

Earlier this month, graphics technology giant NVIDIA announced a partnership with Deutsche Bank to promote the use of AI and machine learning technologies in the financial industry. One of the strategic priorities of this partnership is to improve customer service using interactive avatars, and NVIDIA suggests that future use cases of this technology will “explore immersive metaverse experiences with banking clients”. According to NVIDIA, Deutsche Bank plans to engage customers and employees with virtual 3D avatars in real time.

A writer for the Financial Times recently speculated that a cynical motive lies behind NVIDIA’s embrace of the metaverse. With the bursting of the Bitcoin bubble putting cryptocurrency miners out of business, NVIDIA needs a new market for its increasingly costly graphics chips. But NVIDIA and Deutsche Bank are not the first to try bringing banking into the world of web3.0. Back at the start of the year, JPMorgan opened a bank branch in Decentraland, a metaverse platform.

Source: JP Morgan in Decentraland

While details of the initiative are vague at this point, NVIDIA’s phrasing suggests that they plan to bring banking conversational AI tech to the metaverse at some point. But what would banking in the metaverse look like? And what actually is the metaverse anyway?

What is the Metaverse?

If you remember Linden Lab’s Second Life (first launched back in 2003), or Playstation Home, then you’ll already have a fairly good idea of what the metaverse is. In short, the metaverse is a concept that describes a kind of virtual world, not dissimilar to a massively multiplayer role playing game (MMORPG), but with a more social focus. Users can create avatars; explore virtual environments; buy clothes, property and other items; meet friends; and attend business meetings in a fully immersive 3D environment. There is no single ‘metaverse’, and multiple organisations are competing to implement their own vision with vague promises of interoperability in the near future.

What distinguishes the metaverse from earlier experiments in virtual worlds is use of more recent advances in virtual reality and blockchain technology. Usually, the metaverse is entered into using a VR headset, and many purchases are tracked and logged using blockchain technology, providing a kind of digital ownership. For this reason, those who champion the metaverse often refer to it as a product of the convergence of several advanced technologies that have been developing for some time. The term ‘metaverse’ itself is a reference to Neal Stephenson’s 1992 cyberpunk novel Snow Crash which coined the term. Stephenson himself has lent weight to Lamina1, another metaverse project.

Mark Zuckerberg, CEO of Meta (formerly Facebook) recently led the restructuring of the entire company around the Metaverse, likely in a move to shift the company away from its dependency on Facebook’s ad revenue. Meta also has substantial investments in virtual reality tech, having purchased headset manufacturer Oculus in 2014. However, this rebranding has been costly, as Meta’s share price has plummeted over the last year. Some would argue that this demonstrates a fundamental flaw in the concept of the metaverse, and others might pin the blame on Meta’s flawed implementation of the technology. Others recommend simply comparing tech share prices in the last year, looking at the general downward trend, and not getting too concerned.

As with all web3.0 projects (including cryptocurrency and NFTs), it’s hard to objectively determine the actual value of the metaverse from the immense hyperbole that surrounds it. But, for their part, Bloomberg thinks that metaverse platforms could be worth $800 billion in 2024. With Meta, Microsoft, and NVIDIA all interested in metaverse tech, the concept is receiving hefty investment.

What would banking in the metaverse look like?

As mentioned, JP Morgan recently opened a branch in the metaverse, but the location doesn’t offer any actual banking services. Instead, it appears to be little more than an advert for the bank and their digital aspirations. Likewise, HSBC and Standard Chartered purchased land in Sandbox, another metaverse project, in March and April for much the same purpose.

Source: HSBC in The Sandbox

This isn’t the first time banks have tried to establish themselves in virtual reality. Way back in 2007, Danish investment bank Saxo opened a bank branch in Second Life, and they planned to offer users the ability to manage their offline portfolios using the service. Although, it is unclear if such functionality was ever implemented.

More recently, a neobank called Zelf have styled themselves as the bank of the metaverse, allowing users to manage a range of cryptocurrencies and virtual items. But it does not appear that Zelf has any branches in the ‘metaverse’, and it is instead accessible via a more conventional mobile app.

A Forbes article from November suggests that bank branches in the metaverse might appeal to digital native gen-z consumers. The writer suggests that such virtual lobbies might be used to sell banking products to this demographic or to help them manage their accounts. However, right now, it’s unlikely the average consumer can be convinced to strap a VR headset onto their face just to access their bank account. What will likely influence progress here is the reduction in headset size and initially, the take up of AR Glasses, and when you think about them being just another wearable, the prospect of banking in the metaverse is more convincing. Indeed, it’s an interesting exercise to consider whether we already access a virtual world with internet banking and the like.

How does conversational AI fit in?

If metaverse banking ambitions are to be realised, conversational AI seems key. This is where conversational AI and NVIDIA’s plans for interactive avatars are highly relevant. In the future, the great promise is to enter a bank branch in the metaverse and have a fully immersive conversation with a virtual banking assistant to resolve your customer service issues. If this were the case, the benefits of banking in the metaverse over using a mobile app or calling a contact centre would be far clearer. To put it simply, conversational AI is key to building metaverse and virtual reality experiences that people will want to actually use.

After all, what’s the point of putting on a headset just to tap through some menus? Avatar-based virtual agents are more advantageous than telephone-based virtual agents because they can persist information while allowing natural speech input and output. If you connect with a virtual avatar agent to transfer money from your bank, the experience will be more like a real transaction because the agent can confirm amounts and payees both verbally and again in textual form – much like in a physical bank. And in many circumstances, clarification like this in communication is useful to prevent errors and engender trust in a service’s use and reliability. Indeed, it can be sometimes difficult to converse naturally with a telephone virtual agent due to the inability to determine when their turns of conversation are complete. Users interacting with an avatar can improve communication via video by using additional visual cues, such as an avatar’s lip movements, facial expressions, eye movements, gaze direction, and even gestures. It’s an exciting time.