Banks like JPMorgan are mostly on Decentraland—a 3D virtual world run by the nonprofit—to learn.
The largest US bank, JPMorgan Chase, is the first financial institution to open a customer lounge in Decentraland, a 3D virtual world run by the nonprofit Decentraland Foundation. Also known as a metaverse or Web 3.0, these are virtual worlds where users can buy virtual plots of land as nonfungible tokens (NFTs) recorded on a blockchain using cryptocurrency.
Other banks, like BNP Paribas and ING, tested the virtual waters in the early 2000s with the advent of video games such as Second Life. Despite the recent excitement, such virtual worlds as yet deliver an uneven experience. In January, reviewers at Gizmodo and elsewhere found the Decentraland experience “clunky” and underpopulated.
Dubbed the Onyx Lounge, JPMorgan’s virtual presence sports an avatar of the bank’s CEO, Jamie Dimon, and videos of various bank executives, including its global head of Liink, Crypto, Metaverse and Onyx, Christine Moy who announced her resignation on February 23.
Banks like JPMorgan are mostly on Decentraland to learn, according to Mark Lurie, CEO of cryptocurrency-trading platform provider Shipyard Software. “There are a lot of wealthy people cruising around on Decentraland who may have financial needs that are not always cryptorelated. Putting up a booth there may spark some ideas.”
But where there are banks, there is also money to be made. Digital-asset manager Grayscale estimates the global revenue opportunity across advertising, social commerce, digital events, hardware and developer/creator monetization in the metaverse could be worth more than $1 trillion.
Lurie expects custody to be one of the first banking services to be offered in the metaverse. “Banks like JPMorgan have virtually infinite money, and they protect their brand,” he explains. “That’s a good reason to trust them, compared to, say, a startup.”
Chris Skinner, CEO of The Finanser, a web portal that focuses on the future of finance, believes the most important thing banks can bring to the metaverse is trust.
For example, Ginko Financial, an unregulated bank in the metaverse knows as Second Life, was meant to provide that trust. Instead, it collapsed in 2007 and was unable to pay the equivalent of $750,000 owed to Second Life residents, leading to calls for more regulation in the virtual world.
Watch this space.