Banks in the are looking pretty stupid right about now. It’s very much a case of “you were so preoccupied with whether or not you could that you didn’t stop to think if you should.” #metaverse UK bank HSBC was the first provider to enter the virtual world The Sandbox, following in the footsteps of JPMorgan which set up shop in Decentraland. But judging from the screenshots below they’re all a hot mess with no real strategy behind them. HSBC said it wanted to “create innovative brand experiences for new and existing customers” but to do what exactly? Wander around a branded virtual stadium? KB Kookmin Bank is said to be developing a VR branch test, enabling its customers to access banking services in the metaverse and be used for education and training. The training I get, but banking services in the metaverse? Come on, I wrote about why the metaverse is becoming a very poor carbon copy of the real world built with digital bricks and mortar instead. If you really wanted to create something then partner with Hasbro and build an immersive Game Of Life — Banking Edition experience that leads would-be customers on a financial and educational journey about money (free idea, knock yourselves out) Make it fun. Don’t build a bloody bank branch with a poorly animated tiger and expect people to engage in it. JFC did we learn nothing from Second Life (please, please look at the Dell video I posted last week!) And on that note about history — here are a few headlines from the early 2000s. Bank Failure in Second Life Leads to Calls for Regulation Virtual Banking Banned in Second Life Suggestions that Second Life’s virtual banking industry faces collapse are raising eyebrows Entropia Universe gets a real-world banking license In fact, according to update ToS, Second Life pulled all virtual banking facilities offered and banned them entirely. Such was the state of virtual banking that became an unregulated scam fest. “The Second Life Terms of Service prohibit offering interest or any direct return on investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter.” Where there is a virtual economy there is the opportunity to bend the rules and with all its promise of decentralization and disintermediation offers the chance for ‘banks’ to enter and get away with quite a lot more than they would in the real world — especially where they use the cryptocurrencies native to the platforms. #web3 Even as far back as 2009 that stalwart virtual world called EVE Online had its own bank (of sorts!) An EVE Online player set up a fully-functional bank before going on to become the CEO and rob it, exchanging the funds for real-life currency. Given the game has an extremely strong virtual world goods and services economy that mirrors real-world economics, it was no surprise that some particularly apt spacefarers managed to put together a fully-functioning bank a few years back, complete with intricate interest repayment systems and (almost) airtight liquidity failsafe. The only issue was the bank’s in-game CEO, who had plans of his own - specifically, planned to embezzle over 200 billion ISK (EVE's in-game currency) and convert it into real-life Australian dollars. “Some ingenious players created a bank back in 2009 called the E-Bank, I was a customer of E-Bank myself, just to see how they were doing it. They basically created a vostro account system, kind of like what exists in the central bank of a country.” “They were issuing loans out of the common pool and paying interest as a result,” Pétursson says. “They had a board and it was extremely well done. It takes a lot of ingenuity both to have the idea and to execute it - but then the CEO of the bank made a run [for it]. So we’ve been here before, and we’re here once again. Will HSBC lend $SAND? Can you mortgage a plot of land in Decentraland by borrowing $MANA from JP Morgan? Will their lending interest rates be astronomical to offset crypto volatility? Right now there are no regulations governing banking in the metaverse and financial institutions would be well to heed and research what happened 15 years ago before falling for the slick consultancy pitches or the savvy who can pull the rug as they did in EVE. Also published . here

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