Metaverse Series (3): Is the Metaverse Bank a “blueprint” or a “bubble” at the compliance level?

Abstract: The Metaverse is based on data and computing power, and integrates display technology, blockchain technology and artificial intelligence technology. It has an independent social environment, a full body sense and an independent economic system. The virtual world is relatively independent of the real world. . At present, banks, as financial institutions highly sensitive to economic development, have taken the lead in launching a number of services and products such as virtual digital people, NFT digital collections, and VR business halls, laying out a new track for digital transformation. On the one hand, the concept of Metaverse provides new ideas for the future business format of banks. AR, VR, 3D, big data, blockchain, cloud computing and other technologies covered in the Metaverse field can improve services, optimize products, and digitize the real economy for banks. Transformation brings opportunities. On the other hand, Metaverse is still in the exploratory stage. The related technology, architecture, and scene design are not yet mature. The supporting laws and regulations and industry policies are not yet perfect. Blindly following the trend of Metaverse Finance can easily lead to compliance risk.

 In the future, Metaverse may become an important starting point for the digital transformation of banks, which will bring about major changes in the service products provided by banks, the form of interaction with customers, and even the entire industry. Therefore, clarifying the concept of Metaverse, specifying application scenarios, and issuing policies and regulations are crucial to the compliant development of the financial Metaverse banking industry.

1. Bank entry, preliminary exploration of the application scenarios of the Metaverse

1. Metaverse AI digital human is online

In December 2019, Shanghai Pudong Development Bank launched the digital employee “Xiaopu” for the first time, tooptimize the intelligent customer service scene. In December 2021, Baixin Bank launched AIYA Aiya, a virtual digital employee. At the same time, Baixin Bank mentioned that AIYA Aiya will be active in multiple scenarios such as short videos, apps and virtual live broadcasts in the future to conduct immersive interactions with users. . As a digital employee of a bank, it relies on AI artificial intelligence technology. The same digital employee can serve all financial customers 24 hours a day at almost the same time, solve a series of problems such as waiting in line for manual customer service to answer, and digital Employees can also adjust the services provided according to the different habits of customers, and optimize the service content of the whole process including self-response, business handling, risk control and compliance. In addition, virtual digital employees are also an important interactive node in the banking Metaverse, which is of great significance to how to enter the financial consumption scene in the future.

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(Picture 1: Shanghai Pudong Development Bank digital person “Xiaopu”, picture source: Xinhuanet)

2. Metaverse brings immersive service experience

In February 2022, JPMorgan announced the opening of an Onyx virtual lounge in the Metaverse and released a report detailing the virtual world. According to the report, the virtual world of the Metaverse has its own entrance, currency and GDP. JPMorgan can operate like a real bank in the virtual world, and users can also use the cryptocurrency in the virtual world to buy virtual land. The “lounge” was set up by Onyx, JPMorgan’s blockchain arm. Under the Metaverse technology, the new interactive mode brought by game scenarios can help commercial banks reconstruct the interactive mode with financial customers, realize experiential operation, immersive marketing, and accelerate the integration of financial and non-financial scenarios. Virtual social networking and real-time interaction not only improve user experience, but also accurately observe and record customer needs, thereby promoting commercial banks to continuously improve their professional capabilities and service levels, and enhance customer stickiness in multiple dimensions.

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(JP Morgan “Onyx Lounge”, image source: Tencent.com)

3. Blockchain and NFT digital collections may realize digital assetization and circulation transactions of virtual items

In November 2021, Baixin Bank released the fourth anniversary NFT digital collection “4 inlove”. This digital collection is issued based on blockchain technology and is the first NFT digital collection in the banking industry. The audience of NFT digital collections are usually young groups interested in new industries, new technologies, new fields, and new concepts. These consumer groups generally have advanced consumption awareness and strong spending power, and are mostly high-quality bank customers. Banks issuing their own digital collections can not only play a publicity role, improve their own influence, but also enrich the source of banking business income. In addition, banks can also issue digital collections for customers. According to the value of digital collections, by providing customers with financial services such as authentication, credit granting, mortgage, and conversion, the diversity of bank products and the efficiency of capital turnover can be improved.

4. Build a virtual business hall and use AR / VR and other technologies to build new marketing scenarios

In September 2021, Shanghang Rural Commercial Bank played a “trio” of rural revitalization, launched the online “Funong e Station”, the offline “Funong Station”, and simultaneously launched the “Virtual Business Hall” project to help the jurisdiction. Rural revitalization. The virtual business hall business of Shanghang Rural Commercial Bank is mainly to log in to the remote video banking system through a mobile phone. The services provided include deposit wealth management, loan support, etc., breaking the space limitation of traditional physical outlets. In the future, with the wider application of the Metaverse, the integration with banks will become more mature, creating a virtual bank outlet corresponding to the real world, and embedding financial services in the virtual bank outlet scenario, which will not only break the physical space constraints, but also provide Customers can provide better services, which can help the development of inclusive finance and improve the service level of inclusive finance.

2. At the compliance level, the “Metaverse Bank” is a long-term obstacle

1. Risks in the financial industry

As a financial service industry, banks have high requirements for risk control and risk protection. However, the overall concept of the Metaverse is relatively advanced, and the technical field is too dependent on the underlying technology. The application of Metaverse technology in the financial field may create new industry risks. A senseless experience is an important feature of Metaverse Finance. In the Metaverse, with the help of blockchain encryption technology, users can experience non-inductive financial services, such as non-inductive account opening process, agreement confirmation, face recognition, etc., which is different from traditional online finance, which requires Users can only start using financial services by manually entering information such as account numbers, passwords, and ID numbers. However, the new financial service methods formed under this kind of Metaverse may lead to new legal and industry risks. For example, the financial insensitivity experience may bring greater challenges to privacy protection and personal information security. Traditional financial industry regulatory policies The connotation and extension of the law will not be able to satisfy the development of Metaverse finance.

2. Financial regulatory risks

  As an extension and expansion of the real world, the Metaverse also has social and economic attributes. Therefore, it is necessary to establish a reasonable legal system and regulatory system to maintain the order of the Metaverse world. The decentralization of the Metaverse, virtual characters and other attributes, combined with the characteristics of time value in the financial field, wealth accumulation, and risk-taking, make supervision more complicated. The emergence of NFTs (Non-Fungible Tokens) makes it possible to confirm the ownership of financial products in the Metaverse world, but while NFTs based on blockchain technology build a future value system for the Metaverse, it may also lead to money laundering and terror financing and other risks. In addition, the improvement of Metaverse financial products and service experience is inseparable from Metaverse technology, such as VR device-based interfaces and three-dimensional interaction methods. New technologies may bring new challenges such as financial identity authentication and information security . The digital operation capabilities and digital risk control capabilities of the Metaverse may not be able to cope with the new regulatory risks arising from the Metaverse.

 3. Personal privacy and data security risks

Behind the immersive experience of Metaverse Finance is the amount of data generated and used that it carries far exceeds the previous PC era and Internet era. Compared with the collection of two-dimensional data such as text, images, and videos, the data collection and use of the Metaverse world in the future will be more comprehensive, extensive and diverse, and may even cover the data generated by multi-sensory experiences such as taste and smell, forming three-dimensional data collection and use. normalize. The “Personal Information Protection Law” stipulates that personal information is all kinds of information about an identified or identifiable natural person recorded electronically or in other ways. By analogy with three-dimensional data information, whether future technology can identify and match through the records of personal taste and smell If a natural person can be identified, does the connotation and extension of personal information stipulated in the Personal Information Law need to be further expanded? In addition, under the Metaverse, how to effectively protect the amount of data behind it is another big problem. The promulgation of the “Data Security Law” regulates data processing activities in the real world and ensures data security. However, for the parallel Metaverse world where the real world is mapped one-to-one, it remains to be seen whether the provisions of the Data Security Law can also be used. For these new personal information security and data security issues, the current laws and regulations have not been adjusted for the time being. In the future, with the development of the Metaverse world, the governance of its expanding data collection and use will also become difficult.

4. Criminal Risk

In recent years, the concept of the Metaverse has become hot, and the banking industry needs to be alert to various criminal risks in the development of Metaverse finance. At present, banks are mainly planning and planning for the Metaverse field in advance at the strategic level, and the profit model is still unclear. However, some technology companies and consulting companies have used deception to illegally promote the Metaverse financial products . Services are linked, and crimes are committed with the help of bank credit endorsement. In the first half of this year, funds were absorbed under the names of “Metaverse Investment Project” and “Metaverse Chain Tour”, and illegal and criminal activities such as illegal fundraising were frequently reported. The “Risk Warning on Preventing Illegal Fund Raising in the Name of “Metaverse” reveals a number of activities that disguisedly engage in illegal profit-making activities in the Metaverse and virtual currency. Banks also need to be more vigilant about this.

3. The last words

The concept of the Metaverse originated overseas, and its technology and application path are relatively complex. How to integrate the banking business with the Metaverse in the future, to achieve online, scenario-based, and intelligent, there is still a long way to go, and it is still a long way to go, and it will continue to develop the financial future of the Metaverse. The compliance path is the meaning of the question in the exploration of Metaverse Finance. The digital transformation of the real economy is the general trend, and technology empowering finance and technology assisting inclusive benefits are also the aspirations of the people. The road is long and long, and the road is coming. In the future, the banking industry still needs to adhere to compliance as the cornerstone and support the development of Metaverse Finance with a systematic and standardized institutional framework.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/metaverse-series-3-is-the-metaverse-bank-a-blueprint-or-a-bubble-at-the-compliance-level/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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