We have the invention and evolution of technology to thank for some of humanity’s most significant advances. The invention of the aeroplane in 1903, the computer in 1937, and the internet in 1974 all completely changed how we live our everyday lives. As technology advances, how can the likes of Web3, the metaverse, blockchain and DeFi change the future of fintech?
While a lot of hype has surrounded the metaverse in the last few years, we are yet to see exactly how it will impact people’s lives and different industries.
In an effort to understand how the metaverse can specifically consolidate different sectors of the fintech industry, The Fintech Times asked a number of industry experts for their opinions and perspectives.
‘Interoperability will be key’
Julia Streets is the CEO of international fintech business development, marketing and communications consultancy Streets Consulting. Streets discusses what the term ‘metaverse’ really encompasses, as well as how fintech could utilise it.
“For a strong definition of the metaverse, I refer to the Responsible Metaverse Alliance, the social enterprise and international movement supporting the responsible development of the metaverse. The metaverse is a construct of multiple virtual worlds coming together to enable social connections in 3D virtual universes that resemble reality.
“It is a set of immersive technologies (virtual, augmented and mixed realities) and haptics, as well as AI, ML, video conferencing, games, blockchain, cryptocurrencies, cloud email, social media and live-streaming.
“Fintechs can create amazing experiences by mixing elements drawn from across the industry Imagine buying metaverse real estate with loan financing and insurance. Tenant your property, collect rent, extract the value into the real world or pay for a metaverse education programme or other services. Some believe we are only five to 10 years away from this mainstream way of living and working, and interoperability will be key.”
‘A new asset class that can appreciate in value’
Alvin Kan, director of growth at blockchain network BNB Chain, explains the impact the metaverse could have on financial services:
“The metaverse is an emerging technology that could revolutionise fintech services, creating a unified platform that offers users a seamless and immersive experience. With investment opportunities in digital real estate and virtual businesses, the metaverse provides a new asset class that can appreciate in value, just like physical real estate.
“Virtual worlds like Decentraland and Somnium Space have developed platforms where users can purchase virtual land and build on it, and virtual properties have already been sold for millions of dollars.
“Metaverse platforms like Second Life have their own virtual currencies, allowing users to buy and sell goods and services within the platform. Moreover, the metaverse is home to a growing number of DeFi platforms, like Aavegotchi and Sandbox, which allow players to earn tokens by staking virtual assets and enable peer-to-peer transactions.
“In addition, the metaverse provides a secure and verifiable digital identity for users, which could be used to authenticate transactions and access financial services. Some players are already developing digital identity solutions in the metaverse, such as Blockpass and SelfKey.
“Finally, the metaverse provides a more immersive and interactive environment for buying, selling, and trading gaming assets. Platforms like Enjin enable the creation and trading of virtual assets, which can be used in games and other virtual environments. With all these opportunities and possibilities, the metaverse also has the potential to change the way we think about and interact with fintech services.”
‘Fintechs could bridge traditional financial services and the metaverse’
Kamales Lardi is the CEO of digital business transformation partner Lardi & Partner Consulting and the author of The Human Side of Digital Business Transformation. She commented on how the metaverse can “bring together” different sectors of the fintech industry.
“The metaverse could bring together previously distinct segments of the fintech industry by providing a unified platform for collaboration and innovation. Fintech companies not only play a key role in improving modes of interaction with their customers and retaining them but also generate new revenue streams and prospects for business expansion – cross-selling insurance policies, crypto investments, and investing in NFTs.
“Fintech companies pioneering advancements in cross-border payments could provide a seamless platform for decentralised finance in the metaverse, utilising digital currencies and secure blockchain technology (including cross-border payments, peer-to-peer lending, trading, instant transactions processing, insurance policies, as well as monetising virtual goods and services).
“Additionally, fintech companies could leverage the intuitive and engaging metaverse interface to offer financial education and advice to a wider audience.
“Traditional financial services companies operate within a more rigid infrastructure and environment, often preventing dynamic and innovation. Fintechs could offer traditional firms this speed of change and the skills required to transform the financial services industry. As such, fintechs could bridge traditional financial services and the metaverse.”
‘The metaverse is a great solution to enhance communication with people’
Slava Podmurnyi, CEO of technology partner Visartech, explained how the metaverse could specifically improve the relationship between fintechs and consumers.
“For every sector of the finance industry, it is extremely important to build client relationships based on trust and mutual understanding. The metaverse is a great solution to enhance communication with people.
“By recreating real-world objects and processes in a virtual environment, this technology can also provide a graphical representation of financial services to help customers better understand information.
“Therefore, companies can also make the client a part of these events, which will allow providing higher quality services in a modern format.”
‘Collaborative efforts of multiple industry participants’
David Kadio-Morokro, financial services innovation leader at EY Americas, discussed the importance of collaboration for fintechs.
“The metaverse as it’s currently envisioned is too vast and too complex to be built by just a handful of companies. It will require the collaborative efforts of multiple industry participants in order to have consumers engage at scale. Fintech will not be an exception.
“In the metaverse, fintech is as much about collaboration as consolidation. Setting up and managing Web3 wallets, exchanging crypto for fiat, and storing or transferring digital assets are not easy tasks.
“Fintech companies will collaborate with each other and TradFi to build upon open standards. This will create the on and off-ramps for crypto to fiat transfer, and integrate functionality to store, create, and transfer digital assets into existing platforms that users are more familiar with – such as existing online banking.
“Services like crypto lending, trading, and custody require multiple players to work together across a rapidly evolving regulatory environment to deliver more seamless experiences to users.”
‘Array of fintech options baked in as single integration points
Justin Passalaqua, chief market officer in North America at Worldline, also explained how the metaverse will bring different sectors of fintech together.
“The metaverse is the next evolution of digitisation and embedded finance – all aspects of financial services will be required, and payments will be an intrinsic component.
“But with any innovation comes streamlining for efficiency and customer convenience, in this case; consolidating multiple fintech offerings within virtual or augmented ‘storefronts’.
“For example, your avatar could go to a virtual gym and have their membership payment (digital wallet, direct from a bank account, non-fungible tokens), insurance, lending for equipment purchased (Buy Now, Pay Later), and wealth management built all in one experience, authenticated through biometrics.
“The metaverse takes these innovations to the next level by providing an elevated experience and reducing customer journey disruptions.
“The different providers within the value chain may be absorbed into fintech companies with strong, established brand recognition and trust, especially in terms of payment flexibility and cyber security.
“Smaller organisations may leverage these strategic players through partnerships rather than building or buying their own technology, or alternatively, embedding their offerings within the customer experience may be the best move. Overall, we will see a wider array of fintech options baked in as single integration points within the metaverse.”