Banking on the future: JP. Morgan enters the metaverse
By Matt Redley
If going into a virtual bank to arrange real-life services such as credit, mortgages and rental agreements sounds like science-fiction, think again. JP Morgan has become the first bank to experiment with a metaverse environment, in which users can buy virtual plots of land with cryptocurrency and non-fungible tokens or NFTs.
The bank has opened its virtual world called the Onyx Lounge, which allows users to walk around as their own avatars in a virtual lounge. Users, who resemble slightly more developed Wii Sports characters, roam around a dimly lit virtual lounge which wouldn’t be out of place in Los Angeles. Before you reach said virtual lounge, you are greeted by a tiger and a portrait of JP. Morgan’s CEO, Jamie Dimon. Users accustomed to their local branch banking experience may find that this takes some getting used to.
JP. Morgan’s latest experiment has been launched in a blockchain-based virtual world called Decentraland, a 3D virtual world browser-based platform. On the platform, users can buy virtual plots of land as NFTs via a cryptocurrency, using the Ethereum blockchain network. The virtual plots of land are an experiment in the metaverse real estate market, which has boomed recently. Here, investors can buy, own and sell land in virtual worlds. Sales have been driven by the growth of the online “ownership economy” in Web3, where those who participate also hold an ownership or financial stake in it. Web3 is an idea around a new iteration of the internet based on blockchain technology, and viewed by advocates as decentralised, equitable and user-controlled.
Alongside the launch of JP Morgan’s metaverse offering, the bank has released a report on the metaverse which argues that there is vast business potential around these virtual spaces. “The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion (€880 billion) in yearly revenues,” the report said.
The bank has stated that the virtual real estate market could start seeing services like those found in the physical world, such as going to a bank to arrange a mortgage. With this assertion, JP Morgan has stated that it aims to “plan a major role in the metaverse” and is considering issues in this virtual world which are currently dealt with in real life, such as validating accounts and fraud protection.
The idea of a metaverse has been growing in prominence in gaming circles and has also been tested by brands experimenting with digital advertising. Companies such as Gucci, for example, have released digital collections of its signature clothing and goods in Roblox, an online gaming platform, allowing users to buy its clothes for their avatars. JP Morgan’s pitch to explore the metaverse and their report, however, represents a major symbolic shift in how big business, and banking, views metaverse opportunities.
The JP Morgan report strikes a tentative note on the present-day appeal of the metaverse for the mass market, stating that many areas need to improve. The report cites the need for improvement of overall user experience and avatar performance, alongside the core commercial infrastructure. This chimes with the assessment of Nick Clegg, Meta’s newly appointed president of global affairs, who confessed in a slightly baffling metaverse-based Financial Times interview that more work was needed on the technology, as his hands glided through the virtual mahogany table.
This project represents a natural progression of metaverse experiments, as businesses bet big on the future potential of users integrating in a virtual world. From Warner Music, which is currently building a concert-focused theme park on metaverse platform Sandbox, to accountancy firm Prager Metis, which opened its three-story metaverse headquarters in Decentraland last month, the future, for some, is virtual.