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    Banks eye first-mover advantage to embracing the metaverse

    JPMorgan Chase released its summer reading list last month, an annual tradition for the bank, spanning more than two decades. But this year, the bank took a slightly different approach, choosing to make this year’s collection of books available for visitors to peruse in the virtual lounge it set up in Decentraland in February.

    The move represents JPMorgan’s bet on the benefits of establishing an early presence in the metaverse, an immersive world the bank believes represents a $1 trillion market opportunity.

    The metaverse, a virtual world which users can explore through the use of virtual reality and augmented reality headsets, is a new interaction and engagement model for society, said Sandeep Vishnu, a partner at consulting firm Capco, and it’s a space the banking industry can’t afford to sit out.

    “If the metaverse is a new model for society, for interaction and engagement, then banks have to follow that,” said Vishnu. “Banks have to figure out what role they are going to play in the metaverse, and getting a move and being part of the ecosystem early on might give them some landing rights that wouldn’t be there if they don’t move early.”

    Like JPMorgan, Quontic Bank, is taking a first-mover approach to the metaverse. The New York City-based digital bank, opened a Quontic Bank outpost in Decentraland last month.

    To mark the occasion, the bank hosted a virtual launch party for the space, complete with a DJ and limited non-fungible token (NFT) giveaway.

    Quontic’s discussions around building a presence in the metaverse began at the beginning of the year, Aaron Wollner, the bank’s chief marketing officer, said.

    “We did an exercise in effort and impact and we estimated the efforts to be relatively low, and the impact could potentially be high – not immediately, but potentially,” Wollner said. “That’s how we sometimes think about the innovative things that we do. What is the potential upside, even if it’s not an immediate impact?”

    The digital bank has long aimed to be at the forefront of merging new technology with the banking experience. 

    Quontic claims to be the first U.S. bank to offer its customers a Bitcoin rewards program, a feature the bank launched in 2020. 

    The bank also says it is the first bank to introduce a tap-to-pay mobile payment ring to the U.S. market, a product it officially rolled out in April. 

    Through the metaverse, Quontic is excited about the three dimensional aspect of hosting a space for its customers, Wollner said.

    “We love our digital, dot com experience, but it’s two dimensional. It’s a little flat,” Wollner said. “We try and deal with it through chatbots and various forms of automation that extend that experience, but at the end of the day, it’s limited.”

    JPMorgan launched its Decentraland lounge several months before Quontic opened its space, a move that Quontic viewed as a reinforcement of its own efforts to establish a presence in the virtual world, Wollner said.

    But Quontic views the larger bank’s approach to the metaverse as an example of what to avoid, Wollner added.

    JPMorgan’s Onyx Lounge, named after its platform of Ethereum based services, features a roaming tiger, spiral staircase and a portrait of CEO Jamie Dimon. 

    “We saw that as very self promotional,” Wollner said, referencing the Dimon portrait and the space’s promotion of its new line of crypto business. “It’s very much about JPMorgan, not about their customer. … We doubled down on the notion of, ‘If we’re going to be doing this, let’s do it for our customers. And let’s build it for them.’ And that’s the approach we took. 

    Wollner said the bank is taking an educational approach with the space, inviting customers to visit, learn about Decentraland, crypto wallets and how tradable digital assets work.

    “With the click of a button on our metaverse landing page. You can jump in, and voila, you’re experiencing the Quontic metaverse,” Wollner said.

    But when it comes to operating the space as a full service branch, that’s where Quontic is taking a “wait and see” approach, Wollner said.

    The notion of using the metaverse as an extension of a financial institution’s banking presence raises several regulatory and security questions that have yet to be addressed, Wollner said.

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