JPMorgan XR/Metaverse Case Study

Let me share with you now more details about JPMorgan’s entry into the Metaverse. JPMorgan, which is the investment banking arm of JPMorgan Chase, made two important announcements in 2022. The first announcement took place in February 2022, when JPMorgan became the first bank to enter the Metaverse, opening a lounge in the popular blockchain-based Metaverse called Decentraland. The move represented JPMorgan’s bet on the benefits of establishing an early presence in the Metaverse.

The second announcement was the Metaverse study released by JPMorgan’s Onyx blockchain division that details why JPMorgan is getting into the Metaverse with a particular focus on the Metaverse’s huge business potential. The study, which is titled: “Opportunities in the Metaverse: How Businesses Can Explore the Metaverse and Navigate the Hype Vs. Reality,” states the Metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues. This includes $60 billion coming from socializing, $54 billion coming from transactions spent buying virtual goods, $41 billion coming from ownership of NFTs, virtual real estate and other, and $80 million paid to creators.

JPMorgan calls their lounge in the Metaverse the Onyx lounge. It is located in Metaiuku, a virtual version of Tokyo’s Harajuku shopping district. When you visit the ground floor of the lounge, your avatar can see a roaming tiger, view a wall touting the bank’s blockchain accomplishments, watch videos of financial forums JPMorgan has participated in, and see a portrait of JPMorgan Chase CEO Jamie Dimon, which morphs into the image of Christine Moy, the bank’s head of crypto, who invites you to visit the second floor of the lounge. On the second floor, your avatar can check out what experts are saying about the crypto market, learn about Onyx’s services, and pick up literature from nearby conference tables. Not exactly a ‘hangout’ but rather an illustration of what life in the Metaverse can be like.

JPMorgan built the Onyx lounge to be able to offer institutions and businesses an opportunity to enter the Metaverse. While the JPMorgan Metaverse study makes it clear they do not believe the Metaverse will take over all human interactions, JPMorgan is keen to explore the many exciting opportunities it presents for customers and brands and in the spirit of a pioneer notes the risk of being left behind is worth the incremental investment needed to get started.

Here are the two large areas JPMorgan is currently eying in the Metaverse:

• The first area is virtual real estate ownership. While you can still buy a plot of land in the Metaverse today for around $10,000, in 2021 the average price of a parcel of virtual land more than doubled jumping from $6,000 in June to $12,000 by year-end. That same year, the plot of land next to rapper Snoop Dog’s virtual real estate in the Metaverse sold for a whopping $450,000! Forecasts call for today’s $500 million digital property market (with Sandbox’s Metaverse accounting for $350 million of this total and Decentraland Metaverse accounting for another $110 million of this total) growing 10-fold and becoming a $5 billion market by 2026. JPMorgan believes the virtual real estate market in the Metaverse could eventually start offering services much like the physical world JPMorgan currently works in including credit, mortgages, and rental agreements, which are JPMorgan strongholds.
• The second area is virtual gaming, which is a landscape with its own population and in-game currency and digital assets, and one that parallels the existing global economy. JPMorgan believes virtual gaming presents an opportunity for the bank to play a significant role given its long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, and trading and safekeeping.

In summary, JPMorgan entry into the Metaverse puts them in an advantageous position to profit from its first-mover advantage as well as establish its brand as the Metaverse bank of choice. JPMorgan sees the key bank opportunity as creating a flexible financial services ecosystem or platform that allows consumers to seamlessly move from the physical to the virtual world, providing easy, frictionless, and personalized experiences across e-commerce, payments options and wealth management.

Rival Investment Firms Are Also Actively Pursuing the Metaverse

While JPMorgan may be the first major bank to claim a stake in the Metaverse with the launch of its Onyx lounge, JPMorgan is not the first to acknowledge the trillion-dollar potential of virtual space:

• Rival investment firm Goldman Sachs recently predicted the Metaverse is an $8 trillion market opportunity globally.
• Rival investment giant Morgan Stanley has its focus on China, where they predict the Metaverse’s initial total addressable market in China will be around $4 trillion growing to $8 trillion as the Metaverse starts disrupting offline activity like test-drives, real-estate showings and education, virtual land purchasing, and more.

In addition to these global rivals pursuing the large Metaverse business opportunity, many other financial services institutions are actively looking to expand their Metaverse activities by leveraging their existing digital or Metaverse programs:

• In 2017, BNP Paribas’s launched their virtual reality app that allows their retail customers to access their account activity and transaction records in a VR environment.
• In 2021, Bank of America’s launched its virtual reality training program for 50,000 employees offered at 4,300 of the bank’s financial centers nationwide.
• PNC now offers advisory services for clients interested in buying virtual land in the Metaverse.
• Most ‘all-digital’ banks, e.g., Quonic Bank based in New York, are currently establishing their outposts in the Metaverse.

While the exact path forward for JPMorgan and its rivals may not be completely clear at this time, what is certain is the enormous amount of innovation going on within in the finance industry as it targets the Metaverse as a huge, future business opportunity. Imagine the day when the Metaverse is the front end that not only provides investors with a 3D view of their investment portfolios but also leverages generative AI insights into that view. When you are a true pioneer, which I consider JPMorgan to be, your focus tends to be long term even if the impact may not be immediate. Which is why I encourage every financial institution to not only have a Metaverse strategy but to begin implementing that strategy immediately if not already underway.

My Metaverse business partner, Tim Bajarin, and I are keen to assist institutions at each step of the way to ensure their successful entry into the Metaverse. To read about other aerospace and defense industry Metaverse use cases, I strongly recommend you visit ISM’s award-winning Metaverse Resource Center – www.ismguide.com/metaverse-resource-center – where in addition to hundreds of Metaverse use cases, articles and videos, you can also download ISM’s new “8 Steps to Do Business Successfully in the Metaverse” White Paper, and where you can also learn about and sign up for ISM’s complimentary, 2-hour Metaverse Bootcamp, which is targeted for a company’s executive team.

Barton Goldenberg (bgoldenberg@ismguide.com) is president of ISM, Inc. Since 1985, ISM has established itself as the premier strategic advisor leveraging leading edge technologies – the Metaverse, Digital Communities, and CRM – to create and implement customer strategy with a focus on sales, marketing and customer service. His thought leadership including creator of the ‘Business Success in a Virtual World’ podcast, creator of the award winning Metaverse Resource Center, and author of three business books including The Definitive Guide to Social CRM. He is also in high demand as a keynote speaker (www.bartongoldenberg.com).