Other parts of this series:
The auto and equipment finance metaverse of tomorrow
The metaverse might seem like a fantasy for the future, and not something that will impact finance, but some auto and equipment finance organizations are already pursuing the new opportunities it presents. For those lenders and lessors that have not yet staked their claim, further delay could put them on the back foot.
In our previous post in this series, we described what the metaverse is, provided some real-world examples of how it’s being used, and suggested four actions your business could take today to start your metaverse journey. In this post, we’ll look at four primary use cases we believe your finance customers will demand as soon as tomorrow (or, at least, in the near term) that go beyond a simple virtual showroom. Plus, we’ll suggest four next steps for your metaverse journey.
Let’s start with the use cases.
1. An upgraded pre-sales journey
We’ve talked before about what a reimagined frictionless finance process might look like. But the metaverse promises an even sleeker scenario—one that completely reinvents the pre-sales process for assets like vehicles and equipment. In the metaverse, financiers will be able to collaborate with dealers and manufacturers on an extended reality (XR) immersive experience. Such an experience will incorporate a virtual advisor to explain personalized financing options to customers as they wander around the virtual showroom with its demo vehicles and equipment.
BMW is one car manufacturer that has already launched an augmented reality (AR) showroom. The BMW Virtual Viewer lets customers explore the interior of the brand’s plug-in hybrids, interact with features such as doors and windows, and change the color, wheels and interior options. Toyota offers a similar experience. And we’re sure equipment manufacturers are not far behind.
For financiers, a collaboration like this will likely require new joint business models to build unified customer experiences on a shared platform. The benefits will include a larger customer portfolio, improved loan conversion and greater customer satisfaction.
What’s the difference between XR and AR? Extended reality (XR) is a blanket term for all types of immersive virtual environments. Augmented reality (AR), a subset of XR, is an immersive experience that is accessible and doesn’t require an expensive headset or smart glasses, often using a smart phone instead.
2. Boundary-less showrooms
In the metaverse, customers will be able to move between virtual showrooms as simply as walking from one room to another, without any of the traffic hassles. To keep them interested and ensure stickiness, providers, including auto and equipment financiers, will need to offer interesting, personalized content and XR experiences. Financiers will need to offer a simplified loan process, on-the-spot financing models, easier decisioning and new digital marketing strategies.
In Japan, Nissan recently launched a virtual showroom—Nissan Crossing—which lets customers interact with the cars, sit inside them and even drive around a virtual island. For financiers, metaverse showrooms like this will require new ways of verifying the digital and financial identity of customers, exchanging data and obtaining consents. For example, a platform could require customers to provide credit and marketing consent and agree to share their data when they turn on their VR headset and log in.
The result of metaverse scenarios like this will be a lower carbon footprint for businesses and customers, shorter financing and payment timelines and superior loan conversion rates.
3. Hyper-personalized assets
Customers will soon have new expectations about the degree of personalization available to them, perhaps even beyond vehicle or upholstery color and similar features. In the metaverse, the options could be almost endless. Because the metaverse showroom doesn’t require an existing inventory of physical assets, everything can be built to order, based on the customer’s preference.
MG Motors in India has launched the MG Verse. On its immersive platform, the Explore and Creator’s Center lets customers “personalize, accessorize and build” their next MG vehicle. Customers can also take a virtual test drive and purchase the car from the comfort of home.
By partnering with manufacturers and dealers active in the metaverse, financiers will have new opportunities to do business with their customers. But they will need a flexible credit underwriting process that allows for an increase or decrease in the loan amount and for a robust resale and residual value calculation and analysis. Benefits could include improved margins, better ecosystem revenue growth and higher customer satisfaction.
Beyond physical assets, auto and equipment financiers could finance NFT virtual collectibles. For example, a customer might choose to purchase an NFT version of their new physical car that they can “drive” in the virtual world or to have as a piece of art. An NFT add-on could be bundled with the monthly lease or loan payments.
Several car brands, including Porsche, Lamborghini, Rolls-Royce and Alpine, have released NFTs. Globally, the collectibles marketplace was estimated at $402 billion in 2021 and is expected to reach $1 trillion by 2032.
To take advantage of this huge opportunity, auto and equipment finance organizations will need to perform real-time monitoring of collectibles to understand their value in the highly volatile NFT market. They will also need a way to distinguish real NFTs from fake ones, and authenticate them at the time of buying, selling and exchange.
Steps to take tomorrow
With a view to preparing for these scenarios, we suggest you consider these next steps:
- Set up a cross-functional metaverse team.
- Establish ecosystem partnerships and identify service partners to bring your vision to life.
- Create a roadmap of high priority metaverse use cases.
- Build prototypes of your first use cases to stake your metaverse claim.
Keep in mind that while the metaverse is in its infancy there is time to experiment and innovate. But if you don’t define your initial metaverse strategy now, the chance of gaining a first-mover advantage could evaporate. You might then find yourself scrambling to catch up with companies that seized the opportunity early.
In our next post, we’ll discuss six additional metaverse use cases that we anticipate being relevant in the near future.
Thanks to Anupama Wandawasi and Adam Little for their contributions to this blog post.