The auto and equipment finance metaverse of today
I’ve been hearing a lot about the metaverse and how it’s going to shake up all sorts of markets, and I began to wonder what it will mean for the auto and equipment finance sector. Here in the US, the Today Show recently brought the metaverse to life in a segment every day for a week. The fact that it’s that mainstream must signify something, right?
However, while the metaverse is a hot topic of conversation, for many auto and equipment finance people (including me), it’s still a nebulous concept. That could be why the most common questions we get from our specialty finance clients are: Is the metaverse really going to affect our finance business? What are the use cases? Do we need to do something now or can we wait until it’s more mature?
After speaking with my Specialty Finance Center of Excellence colleague, Abhishek Rastogi, my answer to that last question is an emphatic: Yes, it’s time to act now!
In this three-post series, we’ll discuss what the metaverse is and why it’s going to change how you do business. We’ll explore use cases that are already actively in play and those we anticipate emerging tomorrow and in the future. And we’ll suggest steps your business could take now so you’re positioned to gain a first-mover advantage. To recap, we’ll look at:
- The auto and equipment finance metaverse of today
- The auto and equipment finance metaverse of tomorrow (or the near term)
- The auto and equipment finance metaverse of the future
Let’s dive right in.
What is the metaverse?
The metaverse is an emerging technology that is a bridge between physical and digital identities, properties and spaces. While experts all define it slightly differently, at Accenture we see it as a continuum that spans the spectrum of digitally enhanced worlds, realities and business models.
It applies across all aspects of business, from consumer to worker, and across the entire enterprise. From reality to virtual and back, from 2D to 3D, it is enabled by the convergence of the cloud, artificial intelligence, extended reality, blockchain, digital twins, edge technologies and more.
Why should auto and equipment finance companies care about the metaverse?
The metaverse presents the most significant disruption to businesses since the advent of the internet, and it will define the next big wave of digital transformation. Analysts predict that the market will grow somewhere in the range of $8 trillion to $13 trillion by 2030. That’s a massive potential for expansion in the next eight years.
Across all industries, most of the focus right now is on applying this emerging technology to consumer applications. But the metaverse is going to impact every sector, including auto and equipment finance. It will change how you interact with customers, how you carry out your work, what products and services you offer, how you distribute products and services, and how you operate your business. Specifically, for auto and equipment lenders and lessors, it will transform your sales and selection, origination, servicing and collections.
Four real-world examples of the metaverse in action
Acura announced its entry into the metaverse with a virtual auto showroom—Acura of Decentraland, which opened in March 2022—and with a non-fungible token (NFT) to accompany its new 2023 Integra. The showroom lets visitors explore the new car with its turbocharged engine and six-speed manual transmission, browse a wearables collection and play an exclusive Acura racing game.
John Deere launched its Virtual Pavilion in 2020, which provides customers with a 360° interactive gallery of the company’s agriculture, landscaping and turf products. Customers also have access to an augmented reality (AR) experience where they can instantly place a John Deere tractor in their own environment or take a virtual test drive.
Luxury fashion brands, like Louis Vuitton, Gucci, Balenciaga and Nike, are creating digital clothes and accessories and selling them in digital spaces like The Dematerialised and Roblox. For example, you might have heard that Gucci created an NFT handbag that sold at a higher price than the physical version of the product. The margins for NFTs are huge; as Bloomberg explains, “there are no raw materials to buy, and labor is minimal, (so) virtual clothes are almost all profit.”
At Accenture, we have created One Accenture Park, a virtual campus to help new employees get oriented to our culture and to start building professional relationships. And our enterprise metaverse, known as Nth Floor, is how we bring our geographically distributed workforce together.
Keep these examples in mind, because they relate to the auto and equipment finance use cases we’ll share in our next two posts.
Why is it important to act now?
We’re currently in the early days of the metaverse. Right now, the critical step is to own your space in the metaverse before someone else does—it’s like purchasing your Web domain before someone else grabs it. This is especially true if you want a prime location in one of the mall-like metaverse spaces, such as Decentraland, which allows permissionless participation.
With the technology evolving at a rapid pace, building a flexible and scalable approach to the metaverse is key. As has happened with every digital evolution so far, customer expectations are bound to grow. Soon your customers will demand and expect a metaverse experience and digital products that fit their everyday lives. And if your business doesn’t meet these expectations, they will look to your competitors.
I know it’s hard to wrap your mind around it, but the metaverse is real and there is absolutely a first-mover advantage for those that seize the opportunity now. It allows you time to experiment and innovate while the metaverse is new, without the pressure of having to get it 100% right the first time. Your customers don’t yet have fully formed expectations or experiences to compare yours to, so they will be forgiving of any slips or stumbles. Later, when the metaverse matures, missteps won’t be tolerated. What’s most important now is staking a claim, building a prototype and starting to gain experience.
First steps to set you on the metaverse path today
Here are four things your business can do now as you step into this new paradigm:
- Assign a leader to head up your metaverse initiatives and educate your stakeholders.
- Understand what the metaverse is and how other finance organizations are using it, and develop a high-level vision for your business so you can enter the metaverse with purpose.
- Identify any infrastructure roadblocks that need to be removed before you establish your place in the metaverse.
- Invest in talent and create a growth mindset and culture across the organization to support the broad changes to come.
The metaverse is a new frontier, so what you do today will be key. Auto and equipment finance organizations that embrace the challenge will be in a better position to reap the rewards and capture the potential for dramatic growth.
In our next post, we’ll examine four metaverse use cases to take you through and beyond a virtual showroom. I’ll be digging into this topic in my keynote at the 2022 Eurofinas & Leaseurope Annual Convention in Cascais, Portugal in October. I hope to see you there!