The global metaverse market in finance is poised to grow by $107.06 billion between 2022 and 2027, according to a report by global tech research and advisory firm Technavio. Businesses are investing heavily in the metaverse, with the World Economic Forum claiming an estimated 15% of the global digital economy has already shifted to the metaverse.
Expected to grow at a CAGR of 21.33% in the next few years, the development of metaverse wallets has been identified as one of the key drivers. Additionally, increased focus on VR and AR integrations, AI and the rise in crypto solutions will boost market demand.
Businesses in the finance sector are taking an interest in claiming their spot within the metaverse, with a view to offering customers an improved service.
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Banking in the metaverse
The Technavio report covers components (hardware and software), end-users (brokerage firms, investment banks, etc), and geography (Asia-Pacifica, North America, Europe, Middle East and Africa, South America).
Bank of America Corp, BNP Paribas SA, HSBC Holdings Plc, IBK Industrial Bank of Korea, JP Morgan Chase and Co, and KB Financial Group were analyzed as the key players in in the metaverse finance market.
Other companies identified include Mogo Inc, National Bank of Kuwait S.A.K.P, NH Investment and Securities Co., and Shinhan Financial Group.
“The latest trend gaining momentum in the market is the development of metaverse wallets,” said one of the report’s analysts.
As AR and VR technologies improve to bring immersive experiences to users within the metaverse, companies in finance are taking an interest in providing their services to clients via meta tech, too.
The Shinhan Financial Group, which offers banking and securities among other services, is one financial institution exploring service delivery in the metaverse by providing digital banking services.
Using AR and VR is beneficial as these technologies allow consumers to view their banking and financial information from anywhere using AR glasses. It also creates a hyper-realistic 3D representation of their financial information.
A fast-growing segment
According to Technavio, hardware is expected to take the lead over software in terms of revenue during the forecasted period. Particularly as devices like AR glasses and VR headsets gain popularity.
The hardware segment has already shown potential growth in the market share, as $16.25 billion was realized in 2017 and growth was gradual until 2021.
In terms of geographic markets, the Asia-Pacific will account for 32% of the growth in 2023 while North America will also offer significant growth opportunities to vendors.
However, the metaverse doesn’t come without troubles. The issue of data privacy and security has been heavily debated, since platforms collect large amounts of sensitive data from users’ accounts.
This will also pose a challenge for financial institutions willing to provide services in VR, as the security of banking information is crucial. If they are not resolved, these issues could conceivably affect the growth of the metaverse market going forward.
According to E-Spin, the regulatory framework for the metaverse is not yet clear, giving rise to the possibility of financial fraud. Additionally, there are concerns about the cost of equipment and implementation which could hamper metaverse adoption further.
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