The Era of Banking in Virtual Branches Arrives
Insurance and National Banks Lag Behind Banks and Cards in Metaverse Utilization
[Asia Economy Reporters Sunmi Park, Hayoung Ki] Efforts to integrate technology and financial services using the metaverse are actively underway, centered on banks and credit cards. Although the use of the metaverse in the financial sector is still in its early stages, expectations are growing that a new era will soon open where customers can conduct banking transactions and receive card issuance at virtual branches as non-face-to-face financial services continue to evolve.
According to the financial industry on the 26th, all four major commercial banks?KB Financial Group, Shinhan, Hana, and Woori?are attempting to integrate technology and financial services using the metaverse. The metaverse is a compound word combining 'meta,' meaning transcendence, and 'universe,' meaning world, referring to all virtual worlds that can be represented by applying augmented reality (AR) and virtual reality (VR) technologies to the external world and personal daily life. The metaverse market, which was about 50 trillion KRW in 2019, is estimated to grow rapidly to about 1,700 trillion KRW by 2030.
The use of the metaverse in the banking sector is still in its infancy. It is mainly focused on conducting internal management meetings on metaverse platforms or holding financial education, seminars, and events targeting the MZ generation (Millennials + Generation Z), who are heavy users of the metaverse. For example, Hana Bank has implemented 'Hana Global Campus,' a training space for employees on Zepeto, and Shinhan Bank has built the metaverse stadium 'SOL Baseball Park' to attract customers through baseball team support events.
However, since global leading banks are already promoting the linkage of online and offline services using the metaverse, domestic banks are also aiming to connect various content and financial services. The industry expects that virtual branches utilizing avatars and artificial intelligence (AI) within metaverse platforms will open, enabling financial services such as customer consultations, transfers, and product subscriptions.
These attempts are largely influenced by the strong recognition of the need to expand contact points with the MZ generation, who prefer internet-only banks, amid the expanding experience of non-face-to-face financial services due to COVID-19. Even if the use of the metaverse does not immediately improve bank profitability, once virtual branches become active, they could help bridge the gap between traditional banks and internet-only banks. Moreover, AR and VR technologies have entered a stable and commercialized stage in terms of productivity, and as banks move toward digitalization, an environment conducive to the application of the metaverse in the financial market has been established.
Card Industry Also Targets MZ Generation Marketing Through Metaverse
The card industry is also focusing on using the metaverse as an opportunity for MZ generation marketing and future customer data acquisition. Ultimately, it is expected that the platform itself targeting the MZ generation will be activated as a metaverse connecting virtual and real worlds.
They have started utilizing the metaverse by launching prepaid cards tailored for Generation Z that offer teen-friendly discounts, providing spaces for music concert fan meetings, building collaboration channels with various brands, and implementing diverse communication channels among users. After expanding customer contact points, the plan is to create synergy by linking online and offline card services.
On the other hand, the insurance industry is the slowest to adopt the metaverse. While the metaverse user base is mainly the MZ generation, the primary consumers of insurance are those aged 40 and above, and due to the conservative nature of insurance products, selling them in virtual worlds is challenging. Among government-affiliated banks, only IBK Industrial Bank has plans to utilize the metaverse, reflecting the gap between the metaverse user base and the main customer base of government banks.
Seokyoung Shin, a researcher at Hana Financial Management Research Institute, predicted, "Metaverse technology will fundamentally change the way financial businesses operate, customer needs, and services based on the technical characteristic of connecting online and offline beyond the limitations of smartphones." He advised, "It is necessary to consider developing metaverse financial content for the MZ generation and, from a long-term perspective, to develop complex branches specialized in counseling for the silver generation and metaverse experiences."
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