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What we’ve been noticing: As more financial institutions (FIs) explore nonfungible tokens (NFTs), we look at how they could impact the financial services industry.
The backdrop: The wealth management sector already views clients’ high-end physical collectibles as an integral part of an investor’s portfolio. And now more banks are also exploring digital collectibles like NFTs as assets, tech solutions, and marketing tools. Primarily, banks are looking at them within the context of the metaverse, where real-world assets can be bought and sold as NFTs.
Finding NFTs’ use in finance: The tech underpinning NFTs could be useful for FIs, as American Banker points out.
What are NFTs' limitations?
The big takeaway: NFTs and blockchain have real-world uses in financial services that major banks are now exploring—whether as part of a marketing strategy, to assert themselves as digital innovators, or because they want to expand their presence in asset management. FIs should think seriously about whether a division within wealth management should develop expertise in NFTs, or if they should build relationships around services targeting token owners, similar to those they've developed with the industry that serves collectors of fine art, antiques, and high-end collectibles.
NFTs might not achieve the explosive growth that some analysts are predicting, but banks should have a strategy in place to reap the rewards if the market does mature.
Read on: Check out our report on What the metaverse should mean to the bank to find out how FIs can embrace the metaverse and NFTs.
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