Behind Crypto-Madness is Experience Economy, and Banking Must Adapt to It

Pandemics hastened the transition to a purely digital economy. Cashless transactions, decentralized crypto coins, e-wallets, digital banks, and e-commerce are all the rage.

It looks like digital provides the main explanation to the nature of the changes around us, but in reality it hides key essence. Let's take cryptocurrency for example. Few people understand the differences and purpose of crypto coins. Dodge coin was minted for the sake of a "Doge" internet meme joke. Nevertheless, they have liquidity and are in great demand from investors, but the market cap for this joke reached $ 31 billion at the end of 2021.

NFT market volume has passed $2.5 billion, and banks do not serve these transactions at all. Crypto investors and NFT artists generate huge wealth in months but struggle with traditional banking services. And with the development of the Metaverse, this market will only grow because the truly digital economy is only started. Are the financial companies ready for this challenge?

The essence hides in experience

How do all the confusing news such as overcapitalization of joke cryptocurrencies, billion-worth startups without sales, crowdfunding campaigns relate to sustainability?

It's very simple - all of this is a part of the same phenomenon. It is not about the development of a digital economy, but rather about the creating of an experience economy. The heart of the changes is that digital has changed the market paradigm to one where commercial ties are built by experience, putting attention, emotions, and human values in front.

The experience becomes the determining factor of the business value, that's why sustainability policies have become just as important to many consumers as company products. In an experience economy, individuals purchase and trade experiences, emotions, or even expectations rather than items, services, or features thanks to global digital accessibility.

That's why someone on the other side of the planet who even does not understand investments, after watching YouTube or TikTok, downloads an investment app and buys crypto coins or Tesla stocks in seconds to participate in hype. Or a 12-years old teenager who creates an NFT collection of digital-only artworks becomes a millionaire in a month.

CryptoPunk 7523 by Larva Labs, sold on Sotheby's for 11,754,000 USD

Digital technology turns experience into money

As we see, in the experience economy powered by digital tech, experience can be directly converted into money. And it’s not only about crypto stuff. 

Millions of everyday individuals now have easy access to incredible opportunities. The essential concern is if they have an exciting experience to share with the rest of the world. Nowadays, everyone may print books without the use of publishing firms, manufacture items without the use of factories, and offer services without enterprises. They only require a smartphone and a bank account. This is also applicable to any business because the market entry threshold never been so low. 

Emotions are at the center of the digitally-driven global experience economy. As a result, businesses are focusing on providing unique, innovative, engaging, and pleasant experiences through their digital services. And even financial brands.

Billionaire Elon Musk has already become a legend of experience economy. He is a brilliant visionary, engineer, and entrepreneur who creates innovative products and takes care of sustainability. He is also a hype genius who affects millions of people.

For examle, Shiba Inu cryptocurrency growth was caused by Musk's tweet on having Shiba Inu puppy. The Shiba Inu crypto coin's 7M percent growth made a man who invested 8000 USD a year ago a billionaire.

Sustainable banking will help adapt to the experience economy

Overall digitalization and network effect is becoming the most powerful engine of the experience economy. And from the human-centered point of view sustainable banking could provide the holistic view on the industry humanization in line with experience economy requirements. 

According to Mobiquity study performed in 2021 with 300 executives from banks in the UK, Germany, and the Netherlands, 80 percent of executives in the Netherlands and 72 percent of UK executives understand the beneficial impact digital has to sustainability.

Sustainable banking is concerned with operating in compliance with the Environmental, Social, and Governance (ESG) requirements. Sustainable ESG criteria are a set of operational requirements for a firm that socially responsible investors use to analyze possible investments.

Environmental criteria take into account how a corporation affects the environment. Social criteria look at what experience is delivered to customers, employees, suppliers, and the communities around. Governance is concerned with the leadership of a corporation, taxes, audits, internal controls, and shareholder rights. According to Cone Communications study, 64% of millennials will not accept a job from a firm that does not perform according to strong corporate social responsibility.

KMPG data show that 80 percent of the TOP100 corporations in 52 countries currently include sustainability in their financial reports. According to a Deloitte survey of Nigerian banks, 95 percent of respondents had undertaken environmental and social initiatives in the previous three years. As a result, 83% of these banks have received non-financial and financial benefits through sustainable banking, including revenue growth.

Conclusion

Money may appear to have no value in the experience economy. That, however, is not the case. We must accept that consumer psychology has shifted. In today's market, the value and power of experience far outweigh the power of money, which frequently results in unexpected consequences.

To match digital requirements, advanced financial companies focus on customers, and develop cutting-edge digital services. Sustainability, as well as digital technology itself, is ultimately about focusing business efforts on human needs and human values. This results in long-term profits for all parties. 

To better adapt to the new economy, businesses must become more human-centered and provide an experience that goes above and beyond the default to outcompete the crowd of millions of one-day products. Think about how to provide creative experiences that will entice demand or, better yet, create hype. In the digital age, as well as the upcoming decade, only human-centered business lead to the best customer and employee experience ensuring profitability.