The metaverse, a virtual world that becomes reality
Over the last two decades, one of the main focuses of tech industry has been the development of platforms to connect the online and the offline environments. Social media, marketplaces, and digital experiences have reshaped the way many of us spend and interact with each other. Despite of that, the biggest transformations related to the intersection of real and virtual worlds are expected to happen in the next few years with the optimization and expansion of the metaverse.
Since 2021, the metaverse has driven mainstream attention and debate. Its main purpose is to build a network of online environments that can replicate the real world by using technologies such as the internet, and virtual and augmented realities. In the sense, who we are in the virtual world will be an extension of who we are in the offline world.
Possibilities offered by the metaverse
We need to consider how the payment industry will be affected by it. For financial institutions, for example, the metaverse represents a strategic inflection point that will accelerate ongoing trends such as the development of sales and marketing services and solutions, risk management strategies, and the popularization of digital assets.
The demographic growth of Millennials (born between 1980-1994) and GenZers (born between 1995-2010) is challenging financial institutions to develop user-oriented portfolios and to implement digital payment solutions to meet the expectations of these digital natives.
Some financial institutions have already started to build branches in the metaverse platform. However, in addition to treating the metaverse as a new delivery channel, organizations should consider virtual universes as meaningful data sources. Given that digital wallets have become a focal point of digital asset trading and have the potential to become a form of digital identity, businesses should focus on building digital wallet portfolios and pursuing the associated opportunities in the future.
Alternative credit scoring models are also being developed to fill a gap left by traditional models, that used to focus primarily on traditional financial data. For example, there are algorithm-based models that use other types of data to provide a broader view of a consumer’s reliability and financial behavior.
The current model does not give financial institutions the ability to have continuous access to their customers’ complete journey. If the spending habits of consumers move from current online platforms to new formats in the metaverse, businesses are likely to find new possibilities to personalize and develop products.
Amid that context, there are fintechs all over the world working on alternative credit scoring models in order to succeed in this segment and to create new opportunities with tech and financial partners. For example, in the US there is a credit card that targets young clients and, using a proprietary algorithm, allows them to build their credit history.
Another key aspect for financial institutions to succeed in the metaverse is investing in marketing and forming partnerships. Collaborating with gaming, sports and entertainment partners can be effective in attracting and engaging Millennials and GenZers, who are known for being exceptionally loyal consumers.
In this new structure, organizations in the financial sector must start to plan how to capitalize on opportunities offered by this new digital revolution, similarly to what happened two decades ago when marketplaces revolutionized the way consumers shop. One thing is clear: the metaverse will change the rules of the game as we move from an internet of information to an internet of value.
This blog post was written by Javier Vazquez, SVP Consulting & Analytics, Visa Latin America & the Caribbean.