Section II: Metaverse Use Cases in the Financial Services Industry

A segment of financial institutions, including broker-dealers, are actively experimenting with incorporating the metaverse and its immersive technologies.⁴⁰ Metaverse technologies can include VR and AR, but these are not the only portals to the metaverse. Users can access virtual worlds through laptops, gaming consoles and phones.⁴¹

Some firms indicated that they are examining how to leverage metaverse technologies for internal training and staff development. Others noted that they are assessing the potential for metaverse-related marketing and appealing to the next generation of investors, while also considering metaverse applications for other business purposes (e.g., trading, monitoring and surveillance and enhanced data visualization). These may have future implications for communications with customers, internal operations, trading and investment opportunities.⁴² Below is a non-exclusive list of areas where the securities industry and related financial markets are considering or exploring potential metaverse-related use cases.

Data Visualization 

Market participants are looking to augment traditional two-dimensional (2D) data visualization techniques using 3D platforms in metaverse environments to improve data consumption, analysis and presentation (e.g., for investor pitches),⁴³ with richer and more nuanced 3D pictures of applicable data sets. Firms are also exploring data visualization applications within the metaverse to help make complex data sets more visually appealing, enabling teams to more readily grasp trends, patterns and connections. 

The metaverse may also impact the way firms present financial information to investors, particularly as advanced and immersive technologies become more readily available. Some market participants noted that using interactive 3D platforms within the metaverse may provide investors with an enhanced view of their financial health, in comparison to static information relying on numbers and written text, by potentially making financial information easier to absorb and remember.⁴⁴ Enhanced visualizations may facilitate investors’ understanding of concepts such as volatility, diversification, bull and bear markets, and the prospective growth of investments. For example, market participants noted that 3D visualization techniques could potentially be used to show investment gains as a towering building and a loss as a chasm in the ground to present information in an easier to understand format for investors. 

Virtual Trading

Some firms are assessing the role that a metaverse environment using VR and AR technology may play in the future of trading. Within a metaverse environment, traders may be able to customize data and research in novel ways, see data in interactive 3D formats, and more readily communicate with colleagues and counterparties.⁴⁵ Some third-party providers have indicated that they are already able to offer VR- and AR-based trade blotters, tickets and charts.⁴⁶ Firms are also exploring proofs of concept to leverage VR to bring greater efficiency to trading desks.⁴⁷ For example, one firm’s prototype would allow traders to see data presented in multiple tiers that are dynamically updated, and to interact with data using hand gestures and voice commands.⁴⁸ However, firms noted that they have not yet implemented any actual virtual trading capabilities, and those exploring these opportunities indicated that they need to fully assess technological, regulatory or other risks. 

Digital Twins and the Industrial Metaverse

Digital twins refer to “the digital representation of physical objects.”⁴⁹ According to some experts, digital twins that are enhanced with immersive, interactive and collaborative features are “the foundation of the enterprise metaverse” as they can allow business assets, processes and people to be recreated virtually in immersive environments.⁵⁰ Market participants have noted that recreating or simulating physical environments in the digital world may allow firms to improve decision making, business processes and the quality of their products.⁵¹ While this concept is not new (for example, digital models have been used to run simulations for years), the metaverse offers potential enhancements on ways to develop and interact with digital twins for graphically-enhanced simulation, analysis and monitoring in a range of daily business activities.⁵² 

For example, one company recently created a digital twin model to guide its return to office strategy during the COVID-19 pandemic.⁵³ The company gauged its re-opening process by using digital twins to determine capacity questions and scheduling when workers would return.⁵⁴ A major financial institution also relied on a digital twin to reduce complexities related to institutional client onboarding.⁵⁵ In addition, a stock exchange worked with video game developers to digitally replicate an initial public offering (IPO).⁵⁶ Market participants have indicated that digital twins with enhancements available through the metaverse, may provide more efficient ways to run test-case scenarios and can help firms improve how their offices are set up and business operations, as well as enhance situational awareness (such as by conducting cybersecurity tests), identify and prevent fraud and assess human behavior.⁵⁷

Payments 

The metaverse offers a potentially lucrative environment for commerce. According to current estimates, there are 37.6 million users spending over $28 billion per year in the metaverse.⁵⁸ As individuals are projected to spend more time in the metaverse, they may potentially be more prone to engage in commerce by purchasing virtual goods. Consumers in the metaverse reportedly hold a total of $163 billion in value in total digital payments, with a median value of $500 per user, and an average of over $7,300, including crypto assets across various metaverse platforms.⁵⁹ Bitcoin, Ethereum, and Robux (the main currency for the centralized gaming platform Roblox) are the most commonly held digital payments in the metaverse.⁶⁰ They are followed by V-bucks (the digital payment on Fortnite’s platform), MANA (the digital payment for Decentraland) and SAND (the digital payment for The Sandbox).⁶¹ Market participants have noted that metaverse users also have a stronger desire to use crypto assets compared to most e-commerce shoppers.⁶²

On Roblox, users purchase the Robux digital payment through a process known as a “booking.” Bookings, which can be processed via one-time purchases or monthly subscriptions (typically through payment processors or cards), can be used to purchase virtual goods and services on Roblox.⁶³ In the past year, Roblox saw bookings increase to $1.12 billion, a 25 percent increase over the previous year.⁶⁴ Decentralized platforms also offer users opportunities to purchase virtual items in the metaverse, including skins, emotes, names and land.⁶⁵ Two notable examples are The Sandbox and Decentraland, which are Ethereum-based virtual worlds where players can build, own and monetize gaming experiences in economies based on the platforms’ native tokens.⁶⁶ However, it is important to note that the native tokens for both of these platforms are currently the subject of regulatory scrutiny as to their legal status within U.S. securities law.⁶⁷

Some market participants believe that metaverse payments may further accelerate the trend toward digital commerce and away from physical commerce as a result of fundamental changes in technology that drive how consumers engage with merchants and service providers.⁶⁸ If users become more accustomed to conducting financial services in the metaverse, this may ultimately shape how investors wish to interact with financial market professionals, including within the securities industry.⁶⁹ In addition, metaverse environments, particularly those involving wearable devices (such as headsets or other devices that connect to the body and gather biometric data), may allow for the collection of far greater amounts of information on users that financial services firms can acquire from data brokers.⁷⁰ Such data can be acquired by firms for a variety of uses, including improving customer acquisition and conducting market research.⁷¹

Training and Collaboration

One study comparing learning within a physical or online classroom environment with learning in a metaverse environment containing immersive virtual spaces found that learners in the metaverse are  four times faster to train, nearly three times more confident in applying skills, nearly four times more emotionally connected to content and four times more focused.⁷² The study notes that this enhanced learning may be, in part, attributable to a fully immersive learning experience commanding a student’s attention and thereby making it less likely for distractions from other devices (e.g., smartphones, desktop computers).⁷³ Embodied learning helps learners retain information by fortifying the relationship between information delivery and physical and sensory experiences.⁷⁴ In addition, some analysts predict that learning in virtual spaces, using VR and AR technologies, may serve as an important part of the next generation of teaching and training methods given the metaverse’s potential to provide elements of realism and sustained engagement.⁷⁵

Some firms within the securities industry have already been exploring ways in which the metaverse may provide more effective ways to train staff as well as offer options for collaboration for team members in different physical locations.⁷⁶ Market participants have indicated that immersive digital training techniques may offer a new, more efficient and cost-effective way to upskill remote staff in both technical and “soft skills” (e.g., leadership, resilience and management).⁷⁷ For example, workers can practice using skills in highly realistic simulations before testing them out in the physical world.⁷⁸ Relatedly, some analysts believe that the first major use cases of technologies such as VR will be carried out by employees using devices bought for them by their employer to increase collaboration in remote work, with immersive 3D meetings being more engaging than 2D video calls.⁷⁹ Others add that, in the near term, they expect that firms will use metaverse technologies for internal collaboration, meetings and conferences and workforce training.⁸⁰

Investor Education

Extensive research has been written about the economic importance of financial literacy and the need for effective teaching methods around financial services.⁸¹ Accordingly, there is increasing demand for strong financial education programs across the country, which some states mandate must be taught in the classroom to better educate future generations.⁸² 

Because the metaverse is targeting the same future generations for its user base, it may be one avenue to address demands for more effective financial education. With metaverse technology driven by the popularity of immersive gaming platforms, such as Roblox, as well as the presence of popular and exclusive brands (e.g., Nike, Gucci, Ferrari) on various platforms, the metaverse presents an opportunity to reach—and teach—younger investors in the metaverse.⁸³ As one observer noted, financial services firms “have a unique opportunity to enter the metaverse and supply financial education, financial well-being [and] brand awareness.”⁸⁴ By meeting potential future investors in the digital realm for education purposes, firms can seek to keep them engaged through content. With several virtual platforms already having a component of earning and spending in-game currency, firms can leverage the embedded financial element to teach about related concepts, such as savings and investing, while cultivating brand awareness and loyalty. 

In 2022, prominent financial services firms began announcing their presence in Decentraland and The Sandbox, as further detailed in the subsequent section. Though these firms reportedly entered the metaverse to pursue different ways to engage with their current, and potential future, investor base, at least one of these firms appears to have created a dedicated entertainment space complete with gamified financial education components.⁸⁵ The firm expanded its efforts with additional (and novel) overtures for meeting younger investors in digital spaces, with games on Roblox and Decentraland.⁸⁶ The games focus on introducing players on these platforms to financial concepts such as earning, spending, saving and investing as well as a “more mindful approach to money.”⁸⁷ They are designed to appeal to both young players as well as parents who seek to provide practical financial know-how through entertaining games and characters that mirror levels of investing risk.⁸⁸

Customer Solicitation and Service  

With digital platforms increasingly embedded into daily life (for commerce, communications and entertainment), the metaverse represents a potentially powerful new avenue for financial institutions to reach and engage with the next generation of investors.⁸⁹ Some analysts predict that future customers may look to the metaverse, using AR and VR technology, to assist with their financial service needs, including banking, insurance and wealth management.⁹⁰ Financial institutions have announced plans to acquire virtual land in a third-party metaverse, while others overseas have actively experimented with opening virtual branches.⁹¹ 

As noted, in the U.S. market, firms are seeking a presence in the metaverse to build brand awareness.  For example, one firm reportedly aimed to engage with investors in sports and gaming communities by purchasing a plot of land in The Sandbox; others acquired a virtual lounge and a dedicated multi-level design space with digital venues including a dance floor, rooftop sky garden, teleportation mechanism and educational games to teach users about finance.⁹² As one of these firms, noted, the way that people engage socially and view finances is changing, and their metaverse strategy is an extension of their social media strategy to engage with younger investors, many of whom rely on social media and gamification to both learn about investing and to actually invest.⁹³  

Though one U.S. firm reportedly collaborated with a major technology platform to create a tool to allow customers to discuss stock portfolios with a VR-based financial planner, none of these U.S. firms currently offer investment services directly in the metaverse but may look to do so in the future.⁹⁴  However, such efforts largely appear to be only exploratory at this stage and would face a number of regulatory considerations (as noted below), particularly as they pertain to existing rules around the communication of financial advice, risk disclosures, recordkeeping and identity verification that may be applicable.