The main challenges of Meta-banks

Operations Transformation, Next Generation Engagement and Interaction … Banks today are fully aware of the gigantic potential of the metaverse. Equipped with technologies such as NFT, augmented / virtual reality, and blockchain, the metaverse, however, presents its own risks and challenges. For banks, some innovations can have real-world implications, such as managing fraud and money laundering. Others raise new questions, such as defining ownership of customer data generated in the metaverse. As banks are set to implement their digital strategies, it is important that they understand the challenges associated with risk mitigation.

The challenges of banking in the Metaverse

Security, privacy, governance and regulation are the main concerns for banks in the metaverse today. While none of these problems are uniquely related to the banking sector, they continue to cause major concern for financial institutions. A particular concern due to the extreme caution in the management and protection of sensitive financial customer data.

Transactions in the metaverse are largely facilitated by cryptocurrencies and NFTs. Cryptocurrency wallets need to be funded by fiat currencies, which are highly regulated. However, cryptocurrency regulations are still nascent, which poses several security risks. Meta avatar customers are very often worried that their cryptocurrency will be stolen or devalued due to scams and volatile market.

Meta-avatars depict twins of real users, who can use biometric devices to mimic their faces and tactile gloves for sensory feedback. While these devices certainly improve the customer experience, they also allow you to authenticate the identity of meta-avatars during banking transactions. In the absence of rigorous identity authentication, banks are likely to face malicious actors to commit fraud or scams. However, biometric devices present their own challenges, namely data ownership. It is therefore essential to establish trusted entities to manage and govern this biometric data to avoid a situation of monopoly or unauthorized monetization through data mining. Data privacy rules relating to the ownership of these customers’ data should also be clearly defined.

How technology can lead the way

Many banks have recognized the many opportunities offered by the metaverse, as well as the multiple challenges to cybersecurity. 80% of bank executives feel ready to seize the opportunities of the metaverse, but recognize they need additional skills to capitalize on this new technological revolution. This is where FinTech companies and technology solution providers can bring their expertise:

• Codify open source policies – Software developers can design privacy regulations using an open source approach, an approach that will allow metaverse data governance to be applied democratically rather than by a single organization or oligopoly, thus avoiding a situation of monetization or monopoly. An open source policy may also include dynamic rules on ownership and management of metaverse data through configurable privacy guidelines.

• Establish standards – As with any technology, it is essential that the standards-setting exercise remain fair and transparent. To this end, the Metaverse Standards Forum plays a pivotal role, as it aims to build an open metaverse through the collaboration of game designers, Web3 companies, etc. Additionally, the results of standards development, such as implementation guidelines, will help banks overcome barriers to security, privacy and regulation.

• Rely on the best experts in the industry – FinTech companies are able to support banks in managing their investments in the metaverse, providing them with their experience in cybersecurity, authentication or identity management. At the same time, IT solution providers can leverage their implementation experience to help banks reduce the risks associated with their implementations. For example, Infosys Metaverse Foundry is designed to simplify and accelerate the way organizations navigate the metaverse. This approach includes virtual and augmented environments for customers, workplaces, products and operations. In addition, Foundry offers over 100 use cases, templates and execution roadmaps ready for implementation, allowing banks to quickly target their strategies.

It’s undeniable: the metaverse has the potential to reimagine banking, especially in the area of ​​customer engagement. However, this new technology presents many challenges to overcome: standardizing the role of NFTs, ensuring customer confidentiality, and most importantly, protecting private data.

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