Money and the Metaverse
If you’ve lived anywhere else apart from under a rock, for better or for worse, you probably may have stumbled upon the word – Metaverse. Recently, Zuckerberg tried to break the internet by revealing a (much ill-designed) version of himself on the Metaverse. And earlier, as a sign of things to come, Zuckerberg also rebranded facebook to Meta. So what is the Metaverse? Well, according to Zuckerberg himself, it is a ‘virtual world people can interact, hold meetings, buy property, and do even more’. So, pretty much like the living world, done virtually.
According to Metaverse enthusiasts, it is a real-time rendered 3D world that simulates real-life objects, history, and entitlements that are experienced synchronously by an effectively large to unlimited number of users.
But why are we writing about it? Any world that replicates ours will need the hierarchy of money. And where there is money, there are banks. Recently, DBS opened up a bank on the Metaverse. Its objective is to make sure that the people in the Metaverse sees a (relatively) known face and being the first, it’s something or someone they can trust with their money. Closer home, the Union Bank of India is making news for its investments in this technology.
What do we think about it?
The growth and scale of the BFSI sector relies on 2 key parameters – trust and security. The Metaverse is built on 2 key technologies – blockchain and Web3 and they check these boxes. The blockchain technology helps secure all the transactions while the Web3 legitimizes transparency and trust among all parties thanks to its decentralized model.
Having said that, Metaverse in itself is in its nascency. Think the internet in the 1990s and mobile apps in late 2000s. While the platform is rife with opportunities, the growth and metamorphosis of the Metaverse will depend on universal adoption on favourable industries such as gaming and ecommerce.
We see 3 key areas where the Metaverse can aid the BFI industry:
1. Customer support – opportunity to interact one-to-one with customers and give and grow solutions
2. Cross-border transactions – the blockchain technology is already faster than existing banking infrastructure and this can be a game changer for the industry at large
3. Employee training – for organizations with a large, global workforce, the Metaverse would be a good central training ground
4. Asset creation – with the advent of NFTs, crypto, and emerging digital assets, people want a safe place to create, store, trade, and build their digital assets that can be transacted with digital or real currency.
The Accenture Technology Vision survey in 2022 also found that about 67% of banking executives across the globe agreed that the Metaverse will have a positive impact on their organizations, and close to 38% said that impact will be transformational.
With the rapid progression of technology, its adoption and its scale, it’s not surprising anymore that the conversation around a virtual world where we ‘prefer’ to live and build, will only make movies such as ‘Ready Player One’ a prophecy.