A pair of watershed deals from leading global banks indicates a new level of interest in the metaverse.
The metaverse is an emerging concept — a digital environment of sorts that attracts users away into a second life — but it’s already attracting the attention of investors all across the board. The list now includes two globally recognized banking institutions: JPMorgan Chase & Co (NYSE:JMP) and HSBC Holdings (NYSE:HSBC).
Investment bank explains metaverse entry in extensive market report
For its metaverse debut, JPMorgan signed a deal with Decentraland, a digital world, to open a digital space dubbed the Onyx Lounge. One of the distinguishing factors of the lounge is the presence of a computerized tiger.
In a report accompanying the launch of the Onyx Lounge, the bank said it is not entering the sector because it believes the metaverse will overtake all human interactions, but because it will garner the attention of consumers.
“The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over US$1 trillion in yearly revenues,” the report indicates.
The document breaks down the metaverse idea and explains that the current version relates to Web 2.0 characteristics; JPMorgan also discusses when it believes Web3 settings will come into play.
Web3 refers to a version of the internet built away from the current dominant service providers, such as Alphabet (NASDAQ:GOOG), Meta Platforms (NASDAQ:FB) and Amazon (NASDAQ:AMZN).
“The metaverse will provide a massive opportunity for business-to-business enterprises,” states JPMorgan.
The bank is betting on being a service provider that can bridge the gap between the physical and digital world.
“Not everything in the metaverse will be relevant for every business,” the report explains. “However, there is little downside to taking the opportunity to explore.”
HSBC buys plot of land from up-and-coming metaverse company
More recently, HSBC signed a partnership to buy digital land in a gaming-specific metaverse called The Sandbox. This plot of land will be used to “engage and connect with sports, esports and gaming enthusiasts.”
Suresh Balaji, chief marketing officer for HSBC’s Asia-Pacific region, said the bank sees great potential in future metaverse experiences, as well as the Web3 opportunity at large, similar to JPMorgan’s perspective.
“Through our partnership with The Sandbox we are making our foray into the metaverse, allowing us to create innovative brand experiences for new and existing customers,” Balaji said.
The goal of this partnership at the moment, according to the executive, is to “co-create experiences that are educational, inclusive and accessible.”
For his part, Sebastien Borget, chief operating officer and co-founder of The Sandbox, said it’s a big vote of confidence for the metaverse to see a “trusted institution” such as HSBC joining this technology opportunity.
“We believe this is the beginning of a broader adoption of Web3 and the metaverse by institutions driving brand experiences and engagement within this new ecosystem,” Borget said.
While specific details are scarce at the moment, the two companies touted some of existing partners for the metaverse created by The Sandbox, including luxury brand Gucci, rapper Snoop Dogg and sportswear brand Adidas (OTCQX:ADDDF,ETR:ADS), among others.
As the notion of the metaverse continues to gain support from established brands and companies, it’s a significant win to see banking institutions like JPMorgan and HSBC get on board.
It’s too soon to tell whether these bets will pay off, but as time goes by market watchers will see how these new tools may be used in the lives of consumers.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.