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How Lenders can create an Immersive Customer Experience

According to McKinsey and Company, the Metaverse has a $5 trillion market potential, and financial institutions do not want to pass up this once-in-a-lifetime opportunity. The metaverse, which combines the most recent digital technologies, is the next step in the evolution of the internet as a place where people may communicate. Technologies are developing quickly, and infrastructure costs for VR/AR are falling precipitously. The focus for lenders will be on how Metaverse can help to deliver next-generation customer experience.

Lending Advisory Services 

Over the last few years, Lenders have focused on digitizing advisory services for mortgages and small businesses through AI driven bots to enable the similar experience to a visit to branch from the comfort of home. However, the human element has been lost in this process of digitization. Small Businesses require plenty of support from banks for their business needs. Small Businesses will interact with intelligent avatar bots which will assist the customers from query handling to product assistance to application submission. Relationship Managers can step in where specialized queries needs to be addressed.

On another front, customers need guidance when it comes to identifying the potential home for the customer to start the home buying process. Intelligent avatars can interact with the customers in the metaverse to identify the customer need from desired location, specific preferences such as near to office or school or hospitals, etc. Based on these inputs, avatars can pull up the options and walk the customer on which will be the ideal buy. This can be further refined based on conversations with the avatar. Customer will have the feel of interacting with a real broker. Banks can thus leverage a combination of relationship managers and avatar bots in the metaverse, to give customers the desired personalized experience.

Home Buying Experience

Recent years have seen a significant digitization of the home buying process, but in its current process, the experience is disjointed, from search of properties, virtual reality walk through, possible furnishing options to funding. Metaverse can help to bring all of this into one provide an immersive experience covering the end-to-end home buying experience. Customers in metaverse can experience from view of the house, real-time different views from different angles, browse through various furnishing options to get a personalized feel of how the customer would like their dream house to look when they would want to move in. Based on the property under view and the add-on’s that customers are looking for their dream home, lenders can offer personalized financing options real-time to help the customers which can then be leveraged by an mortgage agent in the metaverse to verify and complete the digital application on behalf of the customer and deliver a seamless home buying experience.

Vehicle Finance

Lenders have made immense progress in terms of providing an immersive experience using AR/VR prior to purchase of vehicles. Metaverse provides an opportunity for lenders to elevate the vehicle buying process from search of vehicle to configuration to completing a sale. Lenders can provide financing options for the vehicles of interest as the customer is configuring the vehicle of choice to the customer through an interactive bot in the metaverse world. Interactive Conversational bot can capture the required information from the customer and complete the application for the customer only requesting the customer to validate and e-sign the request and thus reimagining the whole car purchase process. As technology advances, consumers won't be far from being able to enjoy an immersive driving and buying/leasing experience from the comfort of their own homes.

Digital Assets

Another area of interest is the "Metaverse Mortgage". TerraZero assisted a customer in obtaining a $45,000 Decentraland plot with a two-year mortgage. Buying a piece of land in metaverse is extremely expensive. Small businesses which look to venture into this metaverse for opportunities can do so with "Metaverse Mortgage". Lenders are in the process of evaluating how to appraise the underlying asset in metaverse. The focus will be on how to de-risk the digital asset in case of platform failure or other potential failure scenarios. One such mechanism is to link the digital asset evaluation to the potential cashflow generation for the asset and the underlying business model of the entity who is applying for metaverse mortgage. As more clarity emerges, business models for collateralizing NFTs and reducing risk will evolve and need to be improved. Though this is not a core focus area for lenders, this is an opportunity which banks can tap into. Risks vs rewards along with the potential regulatory outlook will need to be evaluated by banks. But at the same banks can also offer this as an investment opportunity to their investment banking client base who are keen to invest in metaverse.

Navigating Metaverse

Technologies are always changing, thus there are risks and uncertainties involved. On the maturity curve of digitization, banks are at various phases. While attempting to adopt the most recent digital technologies, banks need to work on the legacy platform and technology debt and how to reduce it. Cybersecurity is another area of concern because the customer's information is exposed in the metaverse due to the variety of innovative banking products being sold to them. Banks will need to be aware of the dangers posed by cyberattacks and implement strategies to reduce these possible risks.

Banks may also think about collaborating or forming partnerships with other metaverses, ecosystem members, and how to link them to existing infrastructure. Another area where banks need to concentrate is identity management in the metaverse. In order to better understand the steps necessary to improve their risk management, compliance management, data security, and fraud management, banks must have a strong data protection mechanism. The technological prerequisites for building an immersive virtual experience, such as the appropriate hardware and the required sophisticated processing capabilities, must also be a priority for banks.



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Harish Kumar

Harish Kumar

Industry Advisory Consultant - Lending

Tata Consultancy Services

Member since

21 Jan 2020



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