Lending in Metaverse: Evolving customer journeys in the metaverse

August 3, 2022

The metaverse is gaining significant adoption across the globe and is now well beyond the hype circle. There is an opportunity for everyone to reimagine how it would look and participate in building this future together. The metaverse is for everyone.

The emergence of a parallel economy with innovative services is opening unparalleled opportunities for financial growth. Metaverse-based real estate is one industry that will see a massive uptick. Like in the real world, individuals dream of getting on the property ladder; the same would be true for the metaverse. The race has already begun, and according to Brand Essence market research, the metaverse real estate market is growing at 31.2% CAGR to 2028. 

According to a Forbes article by Ron Shevlin, “The Sandbox is the largest virtual world in terms of transaction volumes, with 65,000 transactions in virtual land totaling $350 million in 2021. Decentraland—the second-largest virtual world—saw 21,000 real estate transactions worth $110 million last year.” 

The following questions arise from a consumer, retail customer, or investor standpoint.


Some key consumer questions

Below is how we currently see various players engaged in different lending stages.


Currently, we are seeing the crack of dawn in the land of the metaverse. So many things are still evolving and might change in the coming future.

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Reimagining things while lending in the metaverse

Property Selection:  This is one of the most amazing parts of the metaverse. As a user, you would be able to visit the virtual world and be at a location of your choice at a supersonic speed. Nothing less than sci-fi movies. Access to devices such as Oculus or similar would deliver this experience for you, and with time this experience would only get better. Once at the location, you would be able to explore the prospective property, keeping their key objectives in mind (first home, business, etc.).

Credit Affordability: Typically, lenders will have two critical questions for borrowers, their ability to pay back their loan and their intent to pay. Broadly, the ability to pay is determined by facts available about income, expenses, and other loans; this information is typically converted into a Credit Score.

An individual may have this information across both physical and digital income in the metaverse; it will be interesting to see how these overlaps would be combined. Intent to pay focuses on behavioral aspects of the end customer, constantly refined by how they approach things in the metaverse and physical world. In a decentralized world, crypto wallets holding assets in the form of Bitcoins and NFTs would be part of the process. It will be interesting to see how net worth and affordability would be determined across metaverses, especially fluctuating values of decentralized assets.

Legal Searches/Conveyancing:  NFTs would hold the legal holding and value of a purchased digital asset, in this case, property/land. It will be fascinating to see how legal searches and conveyancing stages evolve, considering the decentralized nature of the metaverse.

Questions abound as to …

  • What happens when a given metaverse changes?
  • What may those changes be (as it is fully digital)?
  • Could there be data breaches?
  • What if there is a removal of purchase land/property from a metaverse?
  • How would legal arbitration/journeys look?

Asset Valuation: Virtual real estate prices would be based on almost the same factors as in the physical universe, such as location, size, future potential, risks, etc. However, one can expect new frameworks as NFTs gain dominance, and risks/unknowns in the decentralized world start to get visibility.

Loan Servicing: Similar to credit risk model evolution, servicing models would also evolve. Apart from enabling customers to gain better offers in re-mortgaging opportunities, collections. Continuous real-time analytics, which tracks the change in customers’ ability to pay, and the impact of market conditions on NFTs (against the valuation of digital assets, in this case, property), will drive new engagement models with end customers and risk framework of financial institutions.

Closing thoughts

We all have seen industrial revolution 4.0 gaining momentum. The metaverse journey may lay a foundation for another industrial revolution altogether. It may establish new business models in the industry, possibly forcing dominant players to completely reimagine their businesses in the decentralized world of web 3.0.

As the access to finance continues to play a central role even in the metaverse, we can expect financial inclusion in new emerging economies. Stakeholders across the metaverse ecosystem will evolve, so the knowledge upskilling will require serious focus among players.

Lastly, as the metaverse provides an opportunity to recreate our world, it will be interesting to see how businesses achieve their sustainability goals while embracing the metaverse and modifying their business models around it.

Credits – Infographics and images used in this article are from Freepik

All images are Globant’s copyright

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