The largest US bank JPMorgan opens the first metaverse branch, and luxury brands are lining up for virtual presence as an investment for the future. How real is the virtual now?
Around mid-February this year, JP Morgan Chase &Co, the largest bank in the US, became the first banking operator to open a branch in the metaverse. Well, retail customers should not get overexcited though – it is not yet a virtual cubicle where you can walk in and open a savings account or a virtual teller counter to cash your cheques. As of now, the bank has floated a virtual lounge called Onyx on Decentraland – one of the four largest virtual world domains based on blockchain technology that are flagbearers of the metaverse concept.
Lounge for the future
The name Onyx refers to JPMorgan’s suite of permissioned Ethereum-based services. Being a virtual world, any visitor wishing to enter the bank’s lounge will have to select a digital avatar that will represent them in the metaverse. This avatar can be personalised by choosing the preferred gender, skin tone, hairstyle, clothes and accessories options. Upon entering, a virtual avatar of Jamie Dimon, CEO of JPMorgan greets the visitors. This digital portrait subsequently morphs into the image of the bank’s head of crypto. There is also a virtual tiger roaming around! Inside the lounge, a wall display’s the bank’s blockchain accomplishments. Visitors can also watch a video of Chase’s eCommerce and Fintech Forum held on June 2021.
Nothing much for the serious banker, you say? Merely a promotional tableau of immersive technology, you say? Indeed, you are right – and wrong too! Because the virtual lounge is part of the bank’s first step towards a long-term metaverse gameplan which it has meticulously documented in its just-released whitepaper. JPMorgan says that there is a lot of interest around the metaverse as well as much hype, and the detailed paper intends to help clients cut through the noise by highlighting what the current reality is, what opportunities can businesses look for in the metaverse and what are the areas that needs to be worked upon to transform hype into reality.
According to the JPMorgan whitepaper, the average price of virtual real estate across the four main metaverse sites – Decentraland, The Sandbox, Somnium Space and Cryptovoxels – doubled from $6,000 in June to $12,000 by December 2021. It says:
“We believe the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that parallel the existing global economy…. …This is where our long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, trading, and safekeeping, in addition to our at-scale consumer foothold, can play a major role in the metaverse…. …In time, the virtual real estate market could start seeing services much like the physical world, including credit, mortgages and rental agreements.”
The report points out that as decentralised finance (DeFi), and collateral management comes into play, decentralised autonomous organisations (DAO) will become more relevant rather than traditional finance companies. And that is exactly what the Onyx lounge showcasing. Right now it is a promotional showpiece, but one that announces future possibilities. JPMorgan makes it clear in the report that for that to happen, the metaverse still has a long way to go – especially in terms of overall user experience, the performance of avatars, and commercial infrastructure.
Independent observers concur to the idea, as evident from the following comment by IBS Intelligence:
“Virtual branches are the next logical step for how financial institutions can utilize virtual reality. Imagine never having to take a break during working hours and wait in line at the bank. Now imagine getting personalized banking service at the comfort of your home, when it’s convenient for you while enjoying a cup of coffee.”
A little background
In simple terms, the metaverse can be defined as a convergence of the digital and the physical space driven by the need for remote work and collaboration. Not unlike today’s internet, it appears that the metaverse will probably be controlled by Big Tech companies. That means the host of personal data derived from your virtual activities will be collected by these organizations, way greater in volume than what is currently being collected from the social media. As it becomes one of the most discussed topics of emerging technology, a range of issues have cropped up –regulatory, legal, professional, and ethical.
However, interest in metaverse has skyrocketed in the last one year, especially with the growth in sale and purchase of non-fungible tokens (NFT) – the new age currency key to the metaverse economy. NFTs are digital assets that represent ownership in a unique item or content. It can technically contain anything digital – artwork, music, or video games for example. They can be bought or sold, and their ownership can be tracked using the blockchain.
Virtual brand boom
Despite the extensive bad press earned by Mark Zuckerberg’s clumsy attempt to rebrand his empire as Meta (the new umbrella entity that now owns Facebook, WhatsApp, and Instagram) – ostensibly to stake a pioneering claim to the concept of the metaverse – businesses are paying attention. Metaverse property prices rose by 700% in 2021. Statistics reveal that in India, the interest shown in metaverse and NFTs in that year was the fifth highest in the world. Celebrities like Kamal Haasanat home and Paris Hilton abroad have created their own metaverse presence.
Big tech companies including Microsoft are plunging into metaverse projects. Electronics giant Samsung has opened a virtual store in Decentraland. Luxury consumer brand names like Gucci, Nike, Adidas, Ralph Lauren, and Disney are also pushing into the digital world. Even the Caribbean island country of Barbados has recently set up a metaverse embassy. And just like these early movers will be showcasing their “metaverse brand”, early financial establishments like JP Morgan opting for the virtual world aim to establish themselves as “metaverse lenders.”
Virtual sneakers from Nike
In December 2021, Nike announced the acquisition of RTFKT, “a leading brand that leverages cutting edge innovation to deliver next generation collectibles that merge culture and gaming.” RTFKT creates sneakers and collectibles that are totally virtual. In November 2021, the company collaborated with Japanese pop artist Takashi Murakami to create its Clone X collection of 3-D avatars that are aimed for use in virtual reality and augmented reality settings.
According to Nike, the deal will extend Nike’s digital footprint – as more brands push into the world of NFTs and the metaverse. A statement from John Donahoe, Nike’s president, and CEO, asserted: “We’re acquiring a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
We should keep in mind that Nike took a patent to tokenize ownership of shoes on the Ethereum network way back in 2019. In addition, they launched “Nikeland” – a free, 3-D space inside the Roblox gaming platform. Meanwhile, it is reported that rival sneaker brand Adidas has also teamed up with prominent NFT market players to stay in the competition.
The Gucci Vault
Close on the heels of the JP Morgan lounge, luxury fashion brand Gucci has also entered the metaverse. It purchased a plot of digital land on The Sandbox this February, to tap the Gen Z market. The Sandbox is an Ethereum-based open-world game and community-driven platform where players can build, own, and monetize their virtual experiences. Gucci intends to expand Gucci Vault, its online concept store, to create an interactive experience.
Similar to Nike, Gucci too had earlier digital ventures – although not on the metaverse. In March 2021, itwas notably the first luxury brand to introduce an NFT inspired by its Fall/Winter 2021 collection. Then, in May 2021, they unveiled the virtual Gucci Garden on the Roblox platform to mark its 100th anniversary. The Gucci Garden space was open for two weeks, where the platform’s 42 million users could spend from $1.20 to $9 on collectible and limited-edition Gucci accessories. The items were hidden in a virtual Gucci Garden, which was designed to replicate real-world Gucci Garden exhibitions in Florence and similar global cities.
Analysts at Morgan Stanley observe that luxury brand NFTs are set to become a $56 billion market by 2030. This sharp spike would be primarily driven by the metaverse. It looks like classic high brands are finding the virtual route to be the easiest way to reach out to the next generation customers. The metaverse, thus, could be a great confluence of the young and the old!
Anyone interested can access the JP Morgan whitepaper on the metaverse opportunities at: https://www.jpmorgan.com/content/dam/jpm/treasury-services/documents/opportunities-in-the-metaverse.pdf