Financial Firms and the Metaverse

5 min readMar 16


Leading US institution Morgan Stanley has estimated that global spend on the core metaverse technologies — virtual reality (VR) and augmented reality (AR) — will exceed $73 billion by 2024 (up from $12 billion in 2020). These numbers are hard to ignore.

The concept of metaverses — virtual worlds and communities — is not new. Digital universes have existed in video games for many years, albeit with continuous (and exponential) enhancement in terms of the sophistication of their virtual reality experience and their transactional functionality (such as the ability to purchase ‘add-ons’ within the context of the game). Digital metaverses including Decentraland, The Sandbox and Somnium Space take the (now old school) concept of The Sims and SimCity to a whole new level of immersive experience. Greengage has partnered with the innovative metaverse and specialized Web 3.0 financial hub Eldora to explore innovative e-money solutions for new crypto and digital assets companies and traditional SMEs (more to follow in a separate article).

Most recently, metaverse development has embraced property and real estate, with huge transactions happening in this space — an estimated billion dollars of virtual real estate transactions have taken place in 2022 alone. The arts and fashion industries are also investing heavily in the development of digital assets such as Non-Fungible Tokens (NFTs) and virtual worlds in which to hold, display and sell them. Meta Dubai, in beta testing, offers ‘a complete Dubai experience’ including virtual sightseeing and shopping in virtual stores and malls. Before long, it will become commonplace to shop for high end designer goods in virtual stores, and to enjoy the full customer service experience associated with such purchases, from the comfort of home.

Banking on the metaverse

While the financial services sector can often be slow to join the party when it comes to embracing new technologies, there is no doubt that many banks, institutions and financial service providers are looking at the opportunities presented by the metaverse (alongside other new digital products and technologies) in terms of their own product and business development. In an increasingly competitive and challenging environment, banks and service providers need to keep their business models aligned with the behaviours — and demands — of an evolving customer base.

JP Morgan was the first of the ‘big boys’ to enter the metaverse fray, with BNPP, HSBC and Bank of America also throwing their hats into the ring. JPM’s Onyx Lounge exists in the Decentraland metaverse and is open for business in its Metajuku mall, a virtual shopping experience based on Tokyo’s famous Harajuku fashion district. (Decentraland sells virtual plots of land in the form of NFTs.) Banco de Brasil offers banking services to gamers in the GTA (Grand Theft Auto) Online metaverse; users can open accounts in the gaming universe which operate as conventional accounts in the ‘real world’. (Within the game, users can also assume bank employee roles such as filling up ATMs with pretend money that can, presumably, be stolen from the virtual armoured cars by other players in the game, but that’s a whole new story).

The primary challenge for financial institutions and service providers is understanding the extent to which traditional bank services (like account opening/onboarding) and transactional products can and should exist within metaverses, and particularly, how to ensure that users have the same levels of security, privacy and asset protection when engaging and transacting in an entirely digital and virtual environment as they experience in real life.

More than just transactions

Banks and financial firms operating in the metaverse are focused primarily on facilitating transactions in digital assets such as NFTs, cryptocurrency, land and property. Firms may also seek to offer other traditional services, for example, savings accounts, lending facilities, insurance and investment/wealth management services.

Beyond financial transactions, financial services providers have to think about how to deliver a competitive customer experience in the metaverse, in terms of access to virtual ATMs, branches and even bank employees giving virtual consultations.

A particular challenge for financial services providers is that there is no single metaverse, but multiple, competing ones. Unlike the real world, where bank branches and ATMs operate alongside each other on the high street (and online), and customers can move easily between them, it is more likely that individual metaverses will be ‘supported’ by specific banks.

From an investment perspective, it is difficult to plan to have an active presence in all metaverses, particularly as new ones pop up all the time. Conversely, as increasing numbers of people begin embracing the metaverse, there is the risk of falling behind as a service provider with competitors offering access to digital bank branches, and associated core banking products and solutions, in specific and/or multiple metaverses.

Privacy challenges

The issue of privacy and security is also a sensitivity — and challenge — with respect to development of new digital assets, technologies and associated services. While it is accepted that most online engagements and transactions today require users to give up a certain amount of personal information in order to participate, there is considerable (and understandable) caution around data privacy and protection for new concepts like cryptocurrency, blockchain and the metaverse.

Facebook Meta and other social channels already attract a lot of flak in terms of the enormous quantity of personal data collected, and its use to profile users for targeted promotions. There have been a number of significant global data breaches at Facebook, Microsoft, Amazon and others. Metaverse activity also collects a lot of information from users’ social networking accounts (and through direct transactional activity) which needs to be safe from hackers and other bad actors. There are also concerns around the smart devices associated with metaverse activity, such as ‘smart glasses’ that present different privacy concerns since they screen individuals’ personal environments, potentially encroaching on the privacy of the user and others that may be in their environment.

In conclusion

The increasing convergence of traditional and digital ‘universes’, such as gaming and financial/commercial worlds, presents huge opportunities to financial services providers, and particularly to early movers in this space. Acknowledged as a pioneer in ‘metabanking’, JP Morgan has estimated that total market revenues from financial services activity in the metaverse could exceed $1 trillion annually.

As always in financial markets, however, there are no quick and easy paths to entry or off the shelf, one-size-fits-all solutions. Further, while at an individual level digital adoption is growing at an enormous pace, not everybody will want — or be able — to shift into metaverse/digital banking gear. As such, digital banking will exist alongside traditional services, providing an alternative channel for customer engagement but more importantly, opening up new market and product opportunities for service providers with respect to digital assets.

Read the recent press release on our partnership with Eldora here.