Dutch banking group ING is closing the online community it launched in the virtual Second Life world last year.Although it still is too early to tell if and how companies can ultimately leverage Second Life to gain strategic business advantage, the financial services industry has been expanding in the virtual world as it grows more popular. But some say Second Life is simply good for communications and fun.
The aim of ING's virtual community, a mini-state called ourvirtualholland, was to build an online community of creative people and entrepreneurs. Residents could set up a new business, build houses, and design new products.
ING said the main reason it is quitting Second Life is due to its merger with Postbank.
"We want to change our focus to the merging of ING bank and Postbank. Developments in virtual worlds do not address to that," ING said in a statement.
A number of real-world financial institutions have joined Second Life over the last 18 months. These include Singapore-based financial firm First Meta, who recently launched Second Life's first credit card, Germany's Wirecard Bank, Dutch banking group ABN Amro, and Denmark's Saxo Bank. Second Life also has a virtual stock exchange.
"We take the view that it may or not develop into an important way of distributing information on the Internet," Saxo CEO Lars Christensen said in an interview with Wall St & Technology last November.
Saxo has been using Second Life as a social network where its employees, who are scattered in different physical offices around the world, can meet. Christensen says Second Life is good for communications and fun.
"A lot is anchored in interactions amongst our different offices. We also have a basement in Second Life where employees can have a game of pool. It keeps you cutting edge," he said. Still, Christensen pointed out that the lack of a central bank in Second Life "and some kind of credible angle" has stopped the bank from setting up a foreign exchange market in the virtual world.
"And there's no guarantee where the [Linden] currency might be tomorrow. There's a lack of infrastructure," he said. In fact, Second Life took a serious hit to its credibility last summer, following the collapse of the virtual bank Ginko Financial, which had offered a 40% interest rate, but then reportedly ran out of funds owing customers more than $750,000 (in real money.)
Linden Labs, the San Francisco-based owner of Second Life, said it also had received complaints about several other unregulated banks defaulting on their promises.
In an effort to boost its credibility, last month, Linden banned all unregistered and unregulated banks from the virtual world.
Banks can no longer offer interest or any direct return on an investment from any object, such as an ATM, located in Second Life, "without proof of an applicable government registration statement or financial institution charter".Dutch banking group ING is closing the online community it launched in the virtual Second Life world last year. Although it still is too early to tell if and how companies can ultimately leverage Second Life... Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio