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“As an investment bank whose presence is predominantly online, it’s natural for Saxo Bank to explore potential and evolving avenues for online trading. Besides, Second Lifeis quickly gaining a reputation as not just a marketplace – but as a whole virtual economy, where capital markets are taking shape in a contained environment. It’s exciting to experience a hothouse like this first-hand, and we’re thrilled to be able to explore it with our clients.”
Hah! Just another company jumping onto the virtual world bandwagon like IBM, Reuters and all the others, I thought. I discovered that even French nationalist Jean Marie le Pen has set up a stall in this other world, prompting surely a surreal reaction: a virtual riot.
So, how could I resist conducting Euromoney’s first virtual interview?
For those of you still in the dark, Second Life is an online world where people can create their own characters, meet, greet, buy land and spend their hard-earned cash on virtual trainers and other ephemera.
I spent a good 10 minutes trying to select my journalist avatar (virtual person) – should I go for the Goth, the beach bum, or the city-chic look? I pondered. What is the dress code for virtual business meetings? After some dithering I went for city chic (the only one with a beard), but promised myself I would go back later to give my avatar the true journalist demeanour: paunch, receding hair, glazed eyes and a pint of beer.
When I turned up for the meeting with avatar Stephan Cantor (Saxo Bank’s real life head of product development, Stephan Martinussen), he asked me to wait while he finished off a meeting in “RL” (that’s ‘real life’ to you and me). Luckily I had found the smoking option on the activity list and spent a few minutes enjoying a virtual cigarette. Not a very satisfying experience, but I did feel virtuous, even if I found myself worrying about virtual cancer in the code.
Virtual ciggie stubbed out on virtual pavement but with no sign of my interviewee, I decided to see what other facilities are available to Second Lifers. Just as I was about to teleport myself off to Bridget’s Bunny farm (“From the tame to the wild, they have it all”), Stephan appeared online and ready to take me on a tour of Saxo Bank’s virtual head office. Bridget and her bunnies will have to wait.
My first question about the setup almost asks itself: “Why bother?”
“Saxo is all about online trading, and Second Life is a significant trend in the online world. It is natural for us to be here. Waiting six to 12 months, sitting on the sidelines for a consultancy report wasn’t the way to go. We are gathering experience in a totally new environment, which is great for us”.
According to Stephan the whole exercise has cost less than the price of a full-page advertisement in the Financial Times (for the record, that’s slightly more than £100k [$194,000]) – not a number to be sniffed at. What is Saxo expecting in return?
Apparently, improved internal communications is one benefit.
“We have encouraged our people to set up avatars. Now they are running around, meeting our CEO”, says Stephan. “Official avatars from the bank are given the last name ‘SaxoBank’; if you are wearing the Saxo Bank name or t-shirt that means: ‘I am here in my Saxo Bank personality’. If you want to explore the more exotic places in Second Life, you shouldn’t be doing it in a Saxo Bank t-shirt”
And Second Life can certainly be exotic. While we are having this virtual conversation carnival floats and their music are drifting around Saxo Bank’s island. I have to turn the volume down on my computer before someone in the office yells at me. Time to move on.
“Shall we go inside?” I ask.
“Yes, you will find the music much more relaxing.”
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Indeed.
“You’ve put lift music inside your virtual building,” I note, only to be corrected on the finer points of public melodies. “No, no, no. We’ve put shopping mall music in,” says Stephan.
One area I’m keen to understand is whether this is a marketing exercise or is there a business model underpinning this move. Stephan leads me onto the trading floor to be met by a bank of desks and screens for Second Lifers to get the latest info on Saxo products. Members can also play a trading game and win up to 3,000 Linden dollars (the local currency) each week. And that’s not a marketing gimmick?
“Our next phase is to launch a virtual trading interface. We can create Saxo Virtual Trader,” Stephan tells me. “So you can access your real account from within this virtual universe.”
“If people want to check their funds – whether that’s at a Reuters conference or dancing in a disco – they can do it instantly.”
Saxo Bank is already in discussion with Linden Labs (Second Life’s creators) to help them develop their trading platform.
“We are currently looking at a Lindex (the official currency exchange) activity of $200,000 in daily turnover, which sounds impressive, but when you are talking about leveraged FX trading it would only take half of one of our clients to completely tear that market apart,” Stephan explains.
“If we want to create leveraged FX trading in Linden dollars with euro, US dollars or Swiss francs, it would require a different infrastructure and market place, but that is not what we are planning to do right now. But we have it on our road map.”
He adds: “If the economy matures, then we will be part of that. If another virtual world pops up, the experience we have garnered is transferable and will be invaluable”
That may seem like peanuts in the real world – and still like a marketing gimmick to me – but according to Stephan there are currently 15 to 20 virtual worlds with over 35 million users. And this is very much the beginning.
So, while some may scoff, Saxo Bank could well have the last laugh. A quick look at the economic stats on the Second Life homepage shows that $1.6 million has been spent on virtual products in the virtual economy in the past 24 hours. The idea of people paying something for nothing may sound a little crazy, but some may argue that banks have been making a living out of just such a business model for many years. Perhaps this is a case of evolution for their business.
And, hey, I haven’t forgotten the important things that the Web offers – with the interview done, it’s time for some R&R down at Bridget’s bunny farm.
Lee this journalism stuff is easy. I can’t see why you’re so cross all the time.