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  • Writer's pictureW.B. King

Within You Without You – How CU Insiders Are Operating in the Metaverse

By W.B. King

Similar to cryptocurrency, metaverse has been a hot topic word in 2022. And while cryptocurrencies have been bandied about for years, the digital currency – even with its market volatility – shows increasing signs of staying power. The metaverse is estimated to be on a similar trajectory, with cryptocurrencies projected to provide the financial foundation.

As this cross-market shift occurs, certain credit union industry insiders say it is time to learn what this all-immersive, virtual digital universe – metaverse – is and how it is being used.

“The largest use case currently is gaming. Then branding for major brands,” Bonifi’s President and Chief Executive Officer John Ainsworth told Finopotamus. “Financial services will be a component as consumers evolve to conduct financial transactions.”

John Ainsworth

The Denver-based CUSO provides a verifiable exchange network designed to enable trusted digital transactions using open standards and best-of-breed and security technologies.

Bonifi’s mission, Ainsworth noted, is providing a premier digital network of peer-to-peer financial exchange for financial cooperatives.

Some people have had a metaverse-like experience in Second Life, Roblox or other outlets such as Fortnite, which allows thousands of people to virtually attend concerts. What these platforms offer to those new to the concept is an alternative way to interact, socialize and conduct business.

Not unlike the foreignness of cryptocurrency, say, five years ago, the average consumer isn’t quite sure what the metaverse is or what it was designed to do. A January 2022 rapid pulse survey conducted by Ipsos Digital, for instance, found that 38% of Americans are “somewhat” familiar with the metaverse. About one in two (53%) polled who had children in the household, however, reported “greater familiarity” with the term.

For credit unions new to the metaverse, Ainsworth said there is “absolutely no danger” in taking a wait-and-see approach, but he implored the importance of staying informed.

“At a minimum, they should participate in research-to-action initiatives so they aren’t caught flat footed,” he noted.

Metaverse: Adoption Rates Forecasted to Follow Historical Tech Trends

During the CUNA Governmental Affairs Conference, which took place in Washington D.C. in March 2022, Ainsworth and John Best, CEO of Best Innovation Group (BIG), were interviewed by CUbroadcast’s founder and host Mike Lawson on the topic.

With so many ways to bank presently, Lawson, who noted that his children enjoy playing games like Roblox due to the social and interactive aspects, queried his guests on practical metaverse banking applications.

Best refreshed viewers’ memories about the long and often slow history of adopting new technologies. From banking in branches to banking at home with personal computers to banking on smart phones — the latter two were met with resistance, he said.

“Now here we are with this very immersive environment and it’s about banking anywhere that you want to bank. But like anything else, you get old and you don’t understand it,” noted Best.

BIG is a Tampa-based technology, innovation, and distributed ledger development company that caters to the financial industry.

Speaking to the credit union industry, Best said the idea is not for individual credit unions to have separate branches in the metaverse — this would be too expensive for most organizations. Rather, he suggested one “metabranch” that serves all credit unions and respective memberships.

Lawson likened this concept to shared branching, a premise Ainsworth and Best agreed with, but added that the metaverse holds far more opportunities.

“It reduces the adversarial issues by using smart contracts and by using all these incredible new tools we have,” Best continued. “Imagine updating that whole [shared branch] system so that every credit union in America could represent every credit union in America. If you can’t make a loan for a person because maybe they can’t join [your credit union], some other credit union in the system could have them join and you could service that member in a way you could have never done before.”

Best, who participated in the interview wearing an Oculus Quest 2 virtual reality (VR) headset, which he noted outsold both PlayStation 5 and Xbox this past holiday season, added of the metaverse: “We have gone from impermanence to permanence.”

From left to right: MIke Lawson, John Best and John Ainsworth.

Noting he doesn’t enjoy in-person industry conferences like he used, Best prefers being home in a virtual setting fielding or expounding on industry trends while sitting atop a mountaintop with George Harrison. And while hanging with a deceased Beatle virtually might come across as witticism, he believes that in time the metaverse will change how people interact in the credit union space.

“Once we go from VR, which is this enclosed world. The next step is augmented reality (AR) like Pokémon Go and the next step is extended reality (XR), which will marry all of those together where you could be in the VR version – the twin of the room we are in – and I can be sitting here as a hologram and you see me as that but I’m at home with these [VR headset] and I see you in the [same] environment but I am also in a digital environment.”

With the metaverse, he said, “We are getting to the point where there is permanence where a digital environment or digital piece of property exists…there is permanence of venue, of location — where you can go to a specific place just like you can go to a restaurant [in the real world],” he continued. “It’s the same every time. It [the metaverse] is getting built and creating a new experience.”

Phase One: Research-to-Action

During his conversation with Finopotamus, Ainsworth pointed to a few metaverse banking examples, including Bank of America. The $2.16 trillion company believes the metaverse will be the vehicle to finally take cryptocurrency mainstream.

As a first step, the institution announced in October 2021 that it launched VR training in nearly 4,300 financial centers nationwide. Currently, more than 50,000 employees are practicing complex banking tasks and simulating client interactions. It is estimated that these acquired skills will soon be transferred to virtual banking transactions in the metaverse.

“Our commitment to being a great place to work for our teammates fuels our focus on innovation,” John Jordan, head of The Academy at Bank of America, said in a statement. “VR is highly effective at helping teammates build and retain new skills and it is one of many ways we are using technology to support internal mobility and provide best-in-class learning opportunities.”

Bonifi is also in the metaverse with its MemberPass digital identification solution, which provides credit unions control over identity authentication while protecting personal data.

This is an important issue and speaks to Lawson’s earlier point about his children being active in Roblox, where they have the ability to earn and exchange Roblox bucks. The problem is that there is no way to verify who a user is interacting with, which is a considerable fraud concern underscored by the Second Life banking debacle that began in 2008.

“The first involvement is around ’know your customer’ (KYC) assurance. If your avatar is ‘Gigantor,’ someone will have to assure your KYC requirements,” Ainsworth said of Bonifi’s initiative. “We also are involved in testing a stable coin for financial transactions.”

Part of the reason Bonifi entered the space is that younger generations who have grown up “gaming” do not want to separate their experiences — gaming with friends, then conducting a banking transaction, then shopping all without leaving the metaverse, Ainsworth explained. But overall, he said the metaverse is a “reset” as to how credit unions can engage membership of any age.

Agreeing with Lawson that the metaverse is currently in “phase one,” Best and Ainsworth said they are using this critical time period to experiment.

“It’s always good to play. Let’s see what it’s like. Let’s build something and learn what the constraints are and what the opportunities are. Let’s marry it to the obvious technology, which is MemberPass and payments,” said Best. “Let’s see what it is like to do a virtual loan and by that I don’t mean a loan on a virtual asset, I mean a loan in the virtual world for something real. As that evolves, we will be ready and have some understanding of what could be out there.”

Ainsworth added that his collective team is building a “new evolution of shared services,” which will include understanding multiple partners and multiple exchanges. The developers working on these issues, he said, are “wicked” smart and fast.

When asked if he knew credit unions operating in the metaverse, Ainsworth said not currently but estimates that will soon change.

“There are several [credit unions] that are interested but most are still in the learning stages. I think augmented reality will allow new experiences for credit union cooperatives,” he continued. “The next generation will demand unique and convenient experiences including financial services. At a minimum, it will be important to be a fast follower.”

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