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The auto and equipment finance metaverse of the future

Every day we see new reports of companies joining the metaverse. As bulky virtual reality (VR) headsets become a thing of the past, replaced by more comfortable, sleeker models, customers will come to expect many of their online interactions with companies to take place in the metaverse. But what does that mean for auto and equipment lenders and lessors? 

In our last post, we shared four metaverse showroom use cases where auto and equipment financiers are likely to need a presence tomorrow. Now we’ll look further ahead to imagine what the future might bring, and what you could do to prepare. 

1. NFT-backed collateral

Non-fungible tokens are digital assets that people purchase and that can become collateral that your customers can borrow money against—much like today, where people borrow against assets like their home or commercial property. 

The idea is to give people who invest large amounts of money in NFT assets a way to access cash without having to sell their digital assets. Like with physical assets, in the case of a loan not being repaid, ownership of the NFT asset would be transferred to the financier. 

Some lenders are already using services like Arcade to connect with NFT owners who want to borrow money. In fact, as crazy as this sounds to lenders accustomed to hard assets, someone has already secured a loan worth $1.25 million backed by NFT collateral. In the future, we anticipate this being a common scenario. For auto and equipment finance organizations, it will mean understanding the value of NFT assets and ownership. And updating risk and underwriting models.  

2. Equipment-related charges in VR and XR

Drivers and passengers have for generations been able to access entertainment, such as radio and music subscriptions, in vehicles and heavy equipment. But in the future, we imagine the metaverse will enable a host of new virtual reality (VR) and extended reality (XR) options. 

Audi, for example, recently introduced Holoride’s in-car headset-based VR entertainment system in select Audi models. The system lets passengers play an interactive video or game that syncs to the car’s movements, mimicking the acceleration, turns and stops of the car. 

VR and XR promise to open up new revenue streams for auto and equipment financiers that choose to offer consolidated billing for in-vehicle entertainment, or on-demand billing for industrial consumables like fertilizer or toner, as part of a seamless customer experience. Another option might be digital wallets that could be used to pay for other services such as road tolls, parking and electric vehicle charging. Anything related to the asset is fair game. 

Note that this scenario might require lenders and lessors to implement a service management system to complement the traditional asset-based loan origination and contract management system. This way they can manage billing, payment, account management and user management for service-based offerings—think about the servitization models we’ve talked about previously. 

3. Digital twin offering

In the auto sector, manufacturers are already starting to prototype digital twins for scenario planning. BMW, for example, teamed up with NVIDIA to build a digital twin of its factory floor. This lets BMW visually simulate having 300 automobiles running on a conveyor belt in NVIDIA’s Omniverse and determine which factory routings are the safest for workers. 

Another possibility is that as the metaverse matures, auto and equipment financiers could offer customers digital twins of their real-world assets. People could use these digital twins to maintain and enhance the asset’s operation, such as mileage or battery life in a vehicle or periodic maintenance for a piece of machinery based on its real-world usage, enabling them to protect their costly physical asset. This would open another revenue stream for lenders and lessors, too. 

4. Social communities for loan servicing

Building social communities to gamify loan serving could be another opportunity for auto and equipment financiers to engage with customers. How many of us imagine ourselves as race car drivers, for example? The metaverse provides opportunities to bring that aspiration closer to reality—with ‘race’ participation awards and accolades, and a leaderboard for those who meet requirements, such as timely loan payments or good maintenance records. 

Habitica is an existing app that lets users gamify their habits, including debt repayment and other financial goals. Users enter their goals and then collect gold for progress, which can be used to buy swag for their avatar and to further their character’s journey in the game. 

Lenders and lessors could offer metaverse incentives for the smooth servicing of a loan contract or take advantage of additional marketing and advertising opportunities to boost their brand in the virtual world. Customers could redeem points for NFTs, metaverse tokens or virtual trips, while financiers benefit from increased loyalty and satisfaction, and more reliable payments. 

5. Asset auctions

In the metaverse, the auctioning of NFT assets is likely to become commonplace. Christie’s, the first auction house to accept cryptocurrency payments, hosted an NFT auction where Beeple’s digital collage Everydays: The First 5000 Days sold for $69 million. 

Auto finance companies already repossess and resell vehicles on a large scale. Why not combine the physical and virtual worlds with auctions in the metaverse to reduce the expense of physical auctions and improve the experience for buyers and sellers? 

6. IoT tracking enablement

Today, the Internet of Things (IoT) can already track physical assets and provide information and services online. For example, if you’re on a road trip in your vehicle, your mapping app or GPS can alert you to the next gas or recharging station, and other points of interest on your journey. The metaverse could enhance these experiences with other value-added options based on your location, such as additional services and offers.  

As well as providing value for customers, the ability to track assets could help lenders and lessors locate objects they need to repossess. Also, it could enable more personalized offerings that might interest or even delight the customer. 

Steps to take in the future 

By this point in your metaverse journey, your business should have established a metaverse presence and experimented with prototypes of one or more primary use cases. Now is the time to: 

  1. Refine your primary use cases based on real-world insights. 
  2. Identify and build additional use cases to improve conversion rates, achieve better customer satisfaction and grow your revenue. 

The metaverse is sure to transform every aspect of business, integrating the physical and virtual world in ways that will reshape our lives. Auto and equipment finance organizations need to begin designing their metaverse presence today or they risk having to operate in a world designed by others. The leaders will be those that start their metaverse journey today, stake a claim tomorrow and build on their early successes in the future. 

Thanks to Anupama Wandawasi and Adam Little for their contributions to this blog post. 

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