1、Act now to gear up for the futureBanking in the 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365

2、-1AAs more banks step into the uncharted reaches of the metaverse,bankers are searching for answers about how this virtual and immersive augmented reality can spur growth.The number of financial institutions entering the metaverse continues to grow.Though it is unknown where this potentially transfo

3、rmative-growth technology will lead,it is wise to remember that in the 1990s there were similar uncertainties,leading to questions about the internets commercial potential.Weve learned during the past 25 years that bank internet first-movers benefited far more than laggards,and there is no reason no

4、t to expect a similar result in the still-developing metaverse banking realm.“The metaverse and Web3 represent the next generation of the internet and will reshape the way businesses and consumers engage,transact,socialize,and work,”said Cliff Justice,leader of Enterprise Innovation at KPMG.“Busines

5、s leaders in financial services should consider the precursors to the metaverse like extended reality,blockchain,and new payment rails to begin long-term planning to thrive in this future market.”Our view is that banks not working on a metaverse strategy need to consider creating one now,along with

6、investigating whether they need an immediate presence in one of the many existing metaverse sites.Banks also must recognize that any metaverse site will change many times in the coming years,and the strategies that will set banks directions and goals also will be altered continually for the foreseea

7、ble future.If nothing else,prudence suggests that a senior-level executive be given responsibility for staying current on industry metaverse developments and keep the executivesand even the boardinformed on possible opportunities.For those reasons and more,banks also must commit to broad education p

8、rograms aimed internally and externally.For many,the metaverse is a mystery because it is still evolving and will undergo many changes in the months and years to come.Build it and they will come 100+The number of“metaverse worlds”active or in development.(1)$501Min virtual real estate transactions c

9、onducted in 2021;$85M in Jan 2022.(2)$45,000Amount of mortgage issued in 2021 for a metaverse real estate parcel.(3)(1)KPMG Innovation Lab Research(2)“Metaverse real-estate sales reach$501 million in 2021,”CNBC,February 1,2022(3)“Now You Can Get a Mortgage in the Metaverse,New York Magazine/Curbed,J

10、anuary 28,20221Banking in the metaverse 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AReaso

11、ns for a bank to set up shop in a metaverse worldLearning ways to build retail and commercial relationships with an emerging,powerhouse set of consumers:Build your brandRefine an understanding of the tools and techniques that will acquire customers in this virtual worldTest and hone skills that can

12、build and deliver banking products and services in the mediumEvery day brings dozens of ideas about the commercialization of the metaverseoften described as an interactive,immersive world where virtual and physical experiences create communities.But a real metaversea decentralized,three-dimensional,

13、Web 3.0-powered,virtual worlddoes not exist.J.P.Morgans recently published metaverse report put it this way:“There is no one virtual world but many worlds which are taking shape to enable people to deepen and extend social interactions digitally.4“At the moment,there are siloed prototypes of places

14、that only hint at what a metaverse can be,according to Peter Torrente,KPMG Banking and Capital Markets national sector leader.“A fully developed metaverse,that is decentralized and powered by an entirely new technology,is still an ideanot a reality.Even under these circumstances,he said,“it is essen

15、tial that banks establish a place in todays metaverse,build a brand,prepare to acquire targeted customers,and learn how to leverage the medium to deliver products and services.A recent Harvard Business Review article said:“Many companies are making big bets on the metaverse,even if most people still

16、 arent quite sure what it is.5That uncertainty underscores a central message we believe is vital for every bank to hear:If this industry is going to make long-lasting and deep connections with the primary target audience who will use the metaverse for banking services and products,then the industry

17、must take it upon itself to educate the public and industry workers about what the metaverse is,what it is not,and what it can be.The metaverse is an inevitable future reality4“Opportunities in the Metaverse.J.P.Morgan Chase Bank,January 18,20225“Exploring the Metaverse,Harvard Business Review,JulyA

18、ugust 2022 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AThe roughly 86 million people in t

19、he Gen Z demographicthe largest in the American population,and perhaps the prime cohort target for the metaverseare digital natives.The oldest people in that generation have just finished their college years and are now moving steadily into their years where they will be engaging in many ways with b

20、anks.Are you ready to meet them?Consider these Gen Z data points gleaned from a Vice media/Razorfish survey in 2022:There are suggestions that many spend more time hanging out with friends in the metaverse than they do in real life.They dont view time spent in the metaverse as escapism,but rather an

21、 extension of real life.Slightly more than half said they would like to experience making money in the metaverse.A third would like to experience building a career there.6And,theres this:Older generations in the United States will hand down$70 trillion between now and 2042,according to research by C

22、erulli Associates.7 Baby Boomers will transfer$35 trillion along to Gen Z and Xers in the next 15 to 20 years.And a large portion of those people will have spent dozens of hours a month on games set in the metaverse.They understand the metaverse,and they are comfortable spending time a virtual world

23、.Is it any wonder then that more and more banks are creating“gamified locations of so-called bank“branches in metaverse locations where these games are played?At the moment,little,if any,actual banking is being conducted in those“branches,but the banks have created games that subtly teach financial

24、concepts to users,and simultaneously build their brands and engender trust among young users.Meet your coming wave of customers where they want to be6 “Razorfish Study Finds 52%of Gen Z Gamers Feel More Like Themselves in the Metaverse Than in Real Life,Business Wire,April 19,2022 7 “Millions of Cli

25、ents and Billions on Dollars Are Falling Though a Wealth Transfer Crack,RIA Intel,August 10,2021Gen-ZMillennialsGen-XBaby BoomersSilent GenGreatest GenBorn 20002020Born 19821999Born 19661981Born 19471965Born 19291946 1916192886.40M82.22M65.13M68.70M23.63M1.75MGen Z comprises the largest segment of t

26、he U.S.population.Source:“U.S.Population by Age and Generation in 2020,K,April 20203Banking in the metaverse 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private Engli

27、sh company limited by guarantee.All rights reserved.NDP384365-1A8 “Opportunities in the metaverse:How businesses can explore the metaverse and navigate the hype vs.reality,”JP Morgan,20229“A look into e-commerceand morein the metaverse,”Mastercard,September 27,202110“4 Ways Banks are Experimenting i

28、n the Metaverse,”American Banker,March 21,2022The metaverse has been defined as:At the moment,is there only one metaverse?No,there are multiple“metaverse-like”environments.These are“virtual worlds”or“games”that might,one day,exist within a larger metaverse.Rather than a single program,the metaverse

29、will be a network of information where users can communicate,transact,and consume in a virtual environment.Will a single entity control the metaverse?Though corporations could try to control the metaverse,the backbone of a metaversedecentralizationwould allow creators to rebuff attempts at creating

30、a monopoly.The expectation by many is that the metaverse will be built on public standards,although new standards may need to be built to accommodate a 3D environment.The metaverse is how people will experience Web3,the next generation of the internetusing immersive technologies like augmented reali

31、ty,virtual reality,and extended reality.10Welcome to the metaverse,a hybrid virtual-physical extension of our connected world.The metaverse uses augmented and mixed reality to create a 3D version of the internet.9The metaverse is a seamless convergence of our physical and digital lives,creating a un

32、ified,virtual community where we can work,play,relax,transact,and socialize.8 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee

33、.All rights reserved.NDP384365-1AAccording to the results of the KPMG Consumer Pulse Survey of more than 1,000 consumers,two out of three respondents say they are already aware of the metaverse.Importantly,that awareness increases within younger generations,with 86 percent of Gen Z and 81 percent of

34、 Millennials reporting familiarity.Beyond awareness,nearly half(46 percent)of consumers in our survey believe that“the metaverse can provide a forum to interact with friends in a way that is as meaningful as in person.”11 That finding suggests that it is more likely than not that a large portion of

35、a banks customers now,or soon will,embrace the metaverse because of their comfort with interacting virtually.Metaverse familiarity11 “Consumer Pulse Spring 2022 Report,KPMG LLP,April 2022Age*Familiarity rating1=not at all familiar7=extremely familiar*Numbers do not sum to 100%due to rounding.21%35%4

36、4%Total Consumer SampleNot at all familiar(1)Somewhat familiar(2 to 5)Very familiar(6 to 7)Gen ZGen XBaby Boomer+Millennials14%18%57%32%62%41%47%24%40%39%4%21%Not at all familiarVery familiarSomewhat familiarMetaverse familiarity with consumersOnly 14 percent of Gen Z said in the KPMG Consumer Pulse

37、 Survey that they are not at all familiar with the metaverse.Meanwhile,62 percent said they are somewhat familiar and 24 percent are very familiar.5Banking in the metaverse 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member

38、firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AEven though there probably are as many definitions of the metaverse as there are misconceptions,defining it may be less important to banks at the moment than taking a few i

39、nitial steps that can educate and attract commercial and retail customers,both now and in the longer term.We think that banks would be well-served by focusing on three foundational functions that would establish a stake in any of the many metaverse worlds for the purposes of:Supporting marketing and

40、 branding initiatives:establish a presence and learn to build on it Creating enablement or payment capabilities:use existing payment system to facilitate the growing number of transactions in the metaverse Building corporate collaboration spaces:team with established businesses that already understa

41、nd the metaverse.If nothing else,having access to the tech talent can pay off in the long run.These steps have the potential to underpin the ability to do much more business in a Web3 world,which has the potential to supplant the Web 2.0 world.Getting startedBank&Trust 2022 KPMG LLP,a Delaware limit

42、ed liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AThinking back to 1995,when browsers were starting to proliferate and eventu

43、ally online businesses put a charge into the fledgling ecommerce phenomenon,there were few who could have imagined ecommerce would account for$1 of every$5 in consumer retail spending in the United States.12There already are interesting commercial developments few could have imagined materializing j

44、ust a short time ago.The two largest virtual worldsThe Sandbox and Decentralandsaw 86,000 virtual property transactions totaling$460 million in sales in 2021.13 In Sandbox,a buyer reportedly paid$450,000 for a parcel in Snoopworld,a collection of 22 plots owned by rapper/entrepreneur Snoop Dogg.14Te

45、rraZero,a metaverse developer,says it has issued one of the first mortgages in the metaverse for a$45,000 parcel of ersatz land in an entertainment district of Decentraland.15For all the hype around the metaverse and its potential,we believe there is truth in the notion that a strategic inflection p

46、oint is facing financial services institutions when it comes to deciding on how to take advantage of the digital platforms that buttress the metaverse.Why should banks start building their metaverse strategy today?12 “U.S.Ecommerce Grows 14.2 Percent in 2021,DigitalCommerce360,February 18,202213 “JP

47、 Morgan Opens a Bank Branch in the Metaverse(But Its Not What You Think Its For),Fintech Snark Tank,February 16,202214 “Someone Just Paid$450,000 To Be Snoop Doggs Neighbor in the Metaverse,Fortune,February 2,202215 “Now You Can Get a Mortgage in the Metaverse,New York Magazine/Curbed,January 28,202

48、27Banking in the metaverse 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AThe potential oppo

49、rtunities for the banking industry using the metaverse as a means to engage with the 80-plus million Gen Zersand many Gen Xers and Millennials who will become attracted to the advancing technologyare undeniably attractive.A key message articulated in the KPMG white paper,Go Boldly,Not Blindly,into t

50、he Metaverse,bears repeating here:While the arrival of a true metaverse ignites a sense of urgency to get on board,we view such urgency less about immediate execution and more about figuring out the impact it has on your brand and the potential opportunities available.If the metaverse presents oppor

51、tunities that have a direct impact on a bank,then its worth capturing the moment.The urgency should be driven by deciding what the metaverse can mean for your brand and being thoughtful about enabling a long-term strategy.As the KPMG paper emphases in the statement“go boldly,not blindly,we believe t

52、hat banks must act now while making significant investments in time with the purpose of educating management and staff about the required technology capabilities and strategies to explain the benefits of banking in the metaverse to as many consumers as possible.Although such goals are easily said,it

53、 is clear that there is considerable mystery,hype,and resulting confusion about what the metaverse is and what it can do.“While it may still be early days,the medium we use to communicate and interact is perpetually shifting towards a more immersive blending of the physical reality and digital exper

54、iences.Banks need to get on board to ensure they remain competitive in this more engaging and increasingly phygital world,”Justice said.Looking ahead 2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with K

55、PMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1A That the metaverse will be important for the future of banking is undeniable.What is not yet clear is what banks must do now and in the future to create a vision and execute their metaverse stra

56、tegy.An important step beyond a commitment to education will be the necessity to accept the change in how banks are going to conduct business for many,if not most,of their customers in the years ahead.Such acceptance means embracing a culture that is new,which can be difficultand can result in resis

57、tance that impedes adoption.Equally as important is the recognition that any strategy developed today may become outdated in a very short term,given the incredible speed at which digital technologies are being developed.Adaptability,therefore,may actually be the most critical requirement when dealin

58、g with business models and operating in the digital ecosystem.Are you ready?How can KPMG help?We can assist with your metaverse exploration by helping you:Develop a strategy and execution plan for the metaverse Build your presence and work to achieve your consumer potential in the metaverse Structur

59、e your business to capture the full metaverse opportunity Form partnerships and alliances in the metaverse Capture the employee and cultural experience for your organization.How KPMG can help banks establish a metaverse foothold9Banking in the metaverse 2022 KPMG LLP,a Delaware limited liability par

60、tnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.NDP384365-1AThe information contained herein is of a general nature and is not intended to address the

61、circumstances of any particular individual or entity.Although we endeavor to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.No one should act upon such information

62、 without appropriate professional advice after a thorough examination of the particular situation.2022 KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company

63、limited by guarantee.All rights reserved.The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.NDP384365-1A or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.Start the conversationPeter TorrenteNational Sector LeaderBanking&Capital MarketsKPMG LLPE:Cliff JusticeNational LeaderEnterprise InnovationKPMG LLPE:Chris KonecnyDirector Advisory,C&O Financial ServiceKPMG LLPE:David PessahSenior DirectorKPMG IgnitionKPMG LLPE: