Still in the Early Stages...
Opportunities to Expand Contact Points for Non-Face-to-Face Financial Services and the MZ Generation
[Asia Economy Reporters Sunmi Park, Hayoung Ki] Efforts to integrate technology and financial services using the metaverse are actively underway, centered around 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 of 'meta,' meaning transcendence, and 'universe,' referring to the world, and it signifies 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 won in 2019, is estimated to grow rapidly to about 1,700 trillion won by 2030.
Banking Sector Plans Virtual Branches Utilizing the Metaverse
The use of the metaverse in the banking sector is still in its infancy. Efforts are mainly focused on holding internal management meetings on metaverse platforms or conducting financial education, seminars, and events targeting the MZ generation (Millennials + Generation Z), who are heavy users of the metaverse. Representative examples include Hana Bank implementing the 'Hana Global Campus,' a training space for employees on Zepeto, and Shinhan Bank building the metaverse stadium 'SOL Baseball Park' to attract customers through baseball team support events.
However, as leading global banks are already promoting the integration of online and offline services using the metaverse, domestic banks are also aiming to link 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.
This initiative is 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. Although the use of the metaverse may not immediately improve bank profitability, once virtual branches become active, they could bridge the gap between traditional banks and internet 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 financial market application of the metaverse has been established.
Card Industry Also Uses Metaverse for MZ Generation Marketing
The card industry is also focusing on using the metaverse as an opportunity for marketing to the MZ generation and acquiring future customer data. Ultimately, it is expected that the platform targeting the MZ generation itself will be activated as a metaverse connecting virtual and real worlds.
Starting with launching prepaid cards tailored for Generation Z that offer discounts friendly to teenagers, providing spaces for music concert fan meetings, building collaboration channels with various brands, and implementing diverse communication channels among users, the metaverse is being utilized to expand customer contact points. The plan is to eventually create synergy by linking online and offline card services.
The most proactive player is Shinhan Card. Shinhan Card signed a business agreement with Naver Z, the operator of the global metaverse Zepeto, becoming the first in the financial sector to do so. They plan to build virtual spaces within Zepeto and launch prepaid cards tailored for Generation Z. Hana Card opened 'Hana Card World' within Zepeto this month. Composed of six spaces including an outdoor concert hall and camping site, Hana Card World is designed to allow users to move between spaces online and communicate with others through their virtual selves.
With big tech companies entering the financial industry based on universal platforms, the card industry feels a sense of crisis. The rapid growth of simple payment services is threatening their existing position in the payment market. Since Generation Z is more familiar with digital technology and has a closer affinity with big tech, the need to communicate with Generation Z through the metaverse and collect and learn data has increased to secure these future potential customers.
Slow Progress in the Insurance Industry... No Plans in Policy Banks
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 not easy. Among policy banks, only IBK Industrial Bank of Korea has plans to utilize the metaverse, reflecting the gap between the metaverse user base and the main customer base of policy 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 technological 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, develop complex branches specialized in counseling for the silver generation and metaverse experiences."
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