In the past few months, we have seen the size of the metaverse explode in size. In fact, the top two metaverse platforms - Decentraland and The Sanbox - are adding millions of new users each month. Not only that, we are seeing lots of brands establish themselves in the metaverse. Perhaps the biggest surprise is that mega bank JP Morgan has also decided to jump headfirst into the world of web 3.0. Here, we will take a look at why JP Morgan is moving into the metaverse and what does this mean for the future of the company?
Why This is a Big Deal While we have seen lots of brands come into the metaverse, it is surprising to see a large, conservative bank join such a new platform. After all, this is the same bank who once said that Bitcoin was worthless. To see such a conservative bank make such a drastic move means that the bank sees some incredible opportunity in the metaverse.
A $1 Trillion A Year Potential? How big can the metaverse be? According to JP Morgan’s own research, the entire metaverse market has the potential to be a $1 trillion dollar market. For reference, the entire US gross domestic project is $25 trillion. That means that the metaverse, something which did not exist five years ago, can be worth 2.5% of the US GDP per year.
The JP Morgan Metaverse Lounge You may be wondering what exactly a large bank looks like in the metaverse. Well, right now, JP Morgan is taking things slowly. The bank has opened a simple lounge which features some lessons on cryptocurrency. It is clear that the bank is still trying to “figure out” the best way to use the metaverse to build its brand. Right now, it appears that JP Morgan is simply trying to gain a foothold in the new space.
What can JP Morgan Gain from a Move Into the Metaverse? So what exactly does JP Morgan have to gain from a move into the metaverse? Well, we still don’t know the entire potential of it since the metaverse is still extremely young. However, there are three immediate benefits that JP Morgan can gain from being an early adopter.
1). Targeting younger affluent audiences
As a bank, JP Morgan wants to capture as much of the affluent audience as possible. So where do the young affluent hang out? It appears that many of these well heeled potential customers are moving into the metaverse. This is JP Morgan to freshman up their image and capture this potential market by being more visible in the metaverse. Of course, this could have the potential to backfire spectacularly if the bank is not able to present itself properly.
2). Capture virtual real estate
One of the biggest potential profit centers in the metaverse is virtual real estate. Right now, there are a number of virtual real estate deals that are exceeding that of real world real estate. As a bank, JP Morgan can make some significant profit by providing financing for these potential seven and eight figure deals. Also, there is a potential for JP Morgan to create their own virtual real estate portfolio.
3). Better positioned for metaverse deals
As the metaverse continues to grow exponentially, there will be lots of potential deals in the space. As an example, small platforms may sell themselves to larger ones and some businesses will likely be built, bought and sold on the metaverse. By being one of the first banks in the metaverse, they will be better positioned to understand the space and able to handle more deals.
What Can We Take Away from JP Morgan’s Move Into the Metaverse Looking at JP Morgan’s move into the metaverse, we can draw some conclusions about both the bank and the metaverse as a whole.
1). The metaverse is adopting faster than crypto
What we are seeing right now in the metaverse is incredible in terms of growth and adoption. The earliest incarnations of the metaverse really only go back five years. Think about where crypto was five years into its existence. Back in 2014, many people didn’t even know cryptocurrency existed and certainly no bank wanted anything to do with the digital currency. Contrast that with the metaverse where hundreds of brands have already established a presence. It would not be surprising to see more banks and other brands come into the metaverse over the next 12 months.
2). All types of businesses will be in the metaverse
JP Morgan is likely just the first of many financial institutions in the metaverse. Additionally, we are likely to see businesses that will be created in the metaverse. As an example, we could see virtual real estate firms be created right in the metaverse to handle virtual real estate deals. These companies may potentially be worth billions of dollars.
3). There will be serious money poured into the metaverse
It is likely that we will see a huge amount of investment come into the metaverse in a number of ways. For instance, we will likely see new platforms come into existence. It is no secret that Meta (formally Facebook) will be making a big investment into the metaverse. Other mega tech companies such as Apple, Microsoft, Amazon and Google may soon follow. This could lead to hundreds of billions of dollars of investment in space.
4). The metaverse is not a fad
Finally, with all of this attention and investment, it is obvious that the metaverse is not a fad. In fact, it is likely that the metaverse may be the future of the online experience. We could see people who will go online primarily to interact with people and businesses in the metaverse.
The future of banks and financial institutions in the metaverse JP Morgan may be the first of many financial institutions to join the metaverse. It will be interesting to see which banks will come next and what they will have to offer.