The largest U.S. bank, JPMorgan, is entering the Metaverse with the opening of its Oynx Lounge in the crypto-world Decentraland. The banking giant recognized rapid growth in the space of the digital world and wanted to be at the forefront.
JPMorgan is the first bank to establish a presence on a platform in the Metaverse, following the now well-trodden path of big brands, companies and influencers. The virtual universe offers a $1 billion market opportunity in annual revenue, according to the banking giant, as users leverage the Web3 to market their work in new ways. In the process, digital goods and services are no longer tied to a single gaming platform or brands. This democratic ownership economy, coupled with the possibility of interoperability, could open up immense economic potential, according to JPMorgan.
JPMorgan in the Metaverse
When thinking about the economics of the Metaverse - or "Metanomics" - there are opportunities in almost every market space, according to a recent report from the big bank. To be sure, JPMorgan doesn't believe the physical world will be completely displaced. Rather, they want to explore the many exciting opportunities it offers for consumers and brands alike. Clearly, various corporate leaders and boardrooms are currently wondering about a strategy in the Metaverse.
"The elements of a new digital age are converging in a big way. The Metaverse is the driving force that brings these elements together into a unified experience. The Metaverse is likely to conquer every sector in some form in the coming years, with market opportunities estimated to exceed $1 trillion in annual revenue." - JPMorgan Metaverse report
JPMorgan's move toward a Metaverse follows a similar announcement by Morgan Stanley to its clients. The bank's analysts expect the Metaverse's initial addressable market (TAM) in China to be about $4 billion as it replaces mobile Internet with a "more immersive experience." Once the Metaverse begins to disrupt offline activities, such as property tours, vehicle test drives, and education, that number would likely rise to $8 billion. The financial services provider also believes that the addressable market will be far-reaching, extending beyond the current online consumer market, which is primarily dominated by e-commerce and online entertainment spending.
Parallel world in the digital sphere
According to JPMorgan, the success of the Metaverse depends on a robust and flexible financial ecosystem that allows users to seamlessly connect the physical and virtual worlds. The banking giant believes that the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that are comparable to the existing global economy. In this regard, their long-standing core competencies in cross-border payments, foreign exchange, financial asset creation, trading and custody, in addition to their consumer presence, could play an important role in the Metaverse.
In supporting the gaming ecosystem, JPMorgan is focusing on three areas. On the one hand, the big bank wants to facilitate the industrialization of gaming platform providers with bank-grade products and access to digital assets. Next, JPM is working to offer enterprise-grade digital asset infrastructure along with more than half a decade of experience in the crypto space. Last, the big bank wants to develop specialized products focused on account validation, sanctions verification, transaction status and fraud prevention.
Various companies position themselves
In recent months, many companies have jumped on the Metaverse. Retail and entertainment brands from Walmart and Nike to Disney have joined the rush. The bank also cited household names like PwC, Verizon, Gap and Hulu as early adopters and investors in the blockchain economy. Warner Music, the entertainment giant that hosts a star-studded roster of artists including Dua Lipa and Red Hot Chili Peppers, is also building a concert-focused theme park on the Sandbox platform.
Luxury brand Gucci has purchased property on the same platform to create a space for immersive experiences and offer digital fashion items for purchase targeted at Generation Z. The Sandbox has already signed more than 200 partnerships with companies, brands and individuals, including rapper Snoop Dogg, sportswear company Adidas and Japanese gaming company Atari. It's a similar story with competitor Decentraland, whose partners include JPMorgan.
