The so-called metaverse--a catch-all term for immersive gaming, world-building, and entertainment in virtual worlds, fueled by integrated commerce applications--has become a hot topic of the future ever since social media giant Facebook publicly changed its name to Meta Platforms (FB  ) last year. This "next-gen" internet recently several traditional firms have been trying to enter the metaverse and gain initiative in something that might be the next big thing for technology.

JPMorgan Chase (JPM  ), the largest bank in the U.S., announced this week it has become the first financial institution to arrive in the metaverse, after opening a lounge in Decentraland, one of the most popular virtual worlds based on blockchain technology. The bank unveiled its Onyx lounge, named after its suite of permissioned services based on the Ethereum ecosystem, where visitors are greeted by a digital portrait of Jamie Dimon and a roaming virtual tiger. The bank also released a paper exploring how businesses can find exciting opportunities in the burgeoning metaverse.

JPMorgan head of crypto Christine Moy explained the bank's sentiments in the paper: "There is a lot of client interest to learn more about the metaverse. We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity and workforce, in order to maximize the full potential of our lives in the metaverse."

As crypto-related ideas like non-fungible tokens and decentralized finance enter the mainstream, corporations have made a curious advance into the metaverse. Decentraland specifically has enjoyed growth, as Barbados in November established a metaverse embassy in Decentraland, and Korean electronics giant Samsung (SSNLF  ) in January opened a version of its New York store in the virtual world.

JPMorgan said it believes in "metanomics," noting the average price of a parcel of virtual land doubled in the second half of 2021 from $6,000 in June to $12,000 by December across the four main Web 3 metaverse sites of Decentraland, The Sandbox, Somnium Space, and Cryptovoxels. Moy's report added that the virtual real estate market could start seeing services much like in the physical world, including credit, mortgages, and rental agreements, with some work done by decentralized autonomous organizations.

JPMorgan is especially bullish on the potential for growth in the metaverse. The bank predicts that the metaverse will eventually become a $1 trillion market opportunity in annual revenues, given that its virtual worlds will "infiltrate every sector in some way in the coming years," according to Moy's report. JPMorgan's estimate compares to rival investment bank Goldman Sachs' (GS  ) exuberant forecast that the metaverse will grow into an $8 trillion market.

Although JPMorgan has become the first bank with a presence in the metaverse, it still has a long way to go before capitalizing on the predicted growth. Potential headwinds include the downturn in crypto assets and tech stocks, the looming bearish specter of Federal Reserve rate hikes, and the enormous task of attracting real customers to virtual banking.

As popular late-night comedian Stephen jokes show, banks in the metaverse will likely face challenges with gaining customers like in reality. Until financial institutions experiment and manage to keep customers returning both in the real world and the metaverse, the new Onyx lounge may be more of a PR stunt and less of paradigm shift for the banking sector.

The author does not hold any positions in any of the securities above.