We have the invention and evolution of technology to thank for some of humanity’s most significant advances. The invention of the telephone in 1876, 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?
Throughout March on The Fintech Times, we consider the topic of innovative technology and which inventions and evolutions could have the biggest impact on fintech.
Experts have billed Web3 as the next evolution of the internet. It will create a decentralised, peer-to-peer network where users can interact with each other and with applications using blockchain technology.
But what are some of the benefits of Web3? Leaders at KPMG, Kairos Digital, Hadean, Savimbo, OpenPayd and SendingLabs share their views.
Web3 can ‘create incredible innovation’
Connie Davis is the founder and CEO of Kairos Digital Commerce Consulting. The company provides consulting services to businesses looking to optimise their digital commerce strategies.
Davies believes that Web3 will “rebalance the content creation economy”. It will return the power of our creations, in any form, to the artists, poets, craftspeople, and small businesses. This will also enable them to benefit more from their original ideas and work.
“I don’t believe that we will see mainstream adoption of Web3 until there is mainstream education. There is much work to be done to simplify what it means, and old habits to shift. With millions of individuals still not able to access the internet, Web 1, Web 2 will persist for as long as we have accessibility challenges.
“In the US, fintechs are using a combination of all three, applying a shotgun approach, with integration eyes set on the banks and credit unions. It’s a race to see who can gain the most user adoption with the ‘most shiny’ object. Any success that Web3 companies have has now been clouded by the crypto shakeout of FTX that has consumers running for the hills.
“I do believe that Web3 has the power to create incredible innovation, but traditional finance (TradFi) organisations must yield to new thought and elevated thinking regarding master data management, and be willing to breakdown silos. There are significant challenges in the battle between TradFi regulators and the new thought leaders of the future. Old systems holding on out of fear, whilst communities grow in distress.”
Web3 can ‘help provide data privacy, revenue streams, and end-to-end traceability’
As the driver of the next evolution, Web3 allows the creation of open and decentralised applications and services that are free of any single entity or organisation, says Mimi Keshani, COO and co-founder at deep-tech cloud computing company Hadean.
“This also comes with interoperability in mind, meaning that technologies built on the blockchain are able to interconnect, create secure environments and share data,” she continues.
“In terms of security, Web3 uses cryptography and blockchain technology to create more secure systems allowing users to have more control over their data and privacy. More specifically, in the gaming world for example, Web3 technology can enable new forms of gameplay, ownership, monetisation and seamless peer-to-peer transactions.
“By owning in-game assets and even earning real-world value for their achievements in the game, gamers can create new revenue streams.
“Another example, in supply chain management Web3 technology can enable end-to-end traceability and transparency. With blockchain-based systems, supply chain partners can track and verify the origin, quality, and authenticity of goods in real-time, reducing the risk of fraud, counterfeit products, and other supply chain-related issues.
“However, the Web3 movement is still in its infancy and there is room for innovation and new trailblazers to lead the way with exciting applications that have not yet been imagined.”
Web3 can ‘help people take control of their digital assets’
The chief benefit is the ability to decentralise ownership of assets, says Drea Burbank, CEO and founder of Savimbo, which helps farmers in the Columbian Amazon sell fair-trade credits.
“Web3 uses blockchain which is just a shared spreadsheet,” she explains. “What you put into the spreadsheet is the most important for value, and putting money into it is inherently insecure (blockchain CAN be hacked, has been in the past and more likely in future with quantum computing), unstable (leadership has proven abysmal at best), and inefficient (Web3 financial transactions are simply too expensive in computing power.
“What blockchain does exceedingly well is enable competing parties with collaborating interests to see what’s happening. That means its ideal for collective ownership of assets, and collective management of small-scale voting rights.
“The algorithms for this are nacent, most distributed autonomous organisations (DAOs, organisations that use blockchain algorithms instead of bylaws) function like poorly run oligarchies, but that is a fault of the code, not the technology.”
Web3 is ‘evolving ownership’
Daniel Belda, OpenPayd‘s head of product strategy, advocates that Web3 is actively revolutionising the recording of ownership and value.
He comments: “In Web3, ownership and value are stored in a blockchain, rather than centrally managed databases that is common today with Web2 technologies. Without a centralised intermediary company, Web3 guarantees that users always have full ownership and control over their digital goods and safeguards their identity.
“That opens up more possibilities for P2P transactions and new marketplaces and we’ve only just begun to explore those possibilities. For example, the ownership of any asset like stocks, real estate and cash can be tokenised and represented on a blockchain. These assets can then be traded directly between individuals, democratising access to those markets.
“Web3, however, can go beyond just replicating real-world markets and create entirely new ones. It’s here where fashion brands are leading the way, using Web3 tools to experiment with new models of product interaction. For example, Ralph Lauren, in collaboration with Roblox, launched an exclusive digital only clothing collection and gave avatars the chance to try on and buy the virtual winter sportswear. It was a move Ralph Lauren CEO Patrice Louvet credited in reaching new Gen Z customers and boosting their digital business by 40 per cent.”
Web3 can lead to ‘automated distribution of royalties’
Another advocate of Web3 being ‘all about ownership’ is Bonnie Cheung, head of product/strategy at Sending Labs, a Web3 native communications protocol supporting fully decentralised, private community chat.
“While Web2 has enabled us to communicate and share our perspectives with a global audience, it falls short in providing a secure and transparent record-keeping system for the things we own.
“Rihanna’s NFT for royalty sharing is just the start of what’s possible if we can transfer our digital ownership openly and securely without relying on third parties. However, there’s still a long road ahead.
“Currently, the distribution of these royalties still relies on human intervention, and disputes will still need to be resolved through the traditional legal system. But as Web3 continues to mature and integrate various components, we will eventually see the automated distribution of royalties through secure and verifiable on-chain logic that can be verified by anyone.”
Web3 can ‘revolutionise many use cases’
Cliff Justice is the KPMG US leader of enterprise innovation. He and his group focus on identifying, developing, and deploying the next generation of technologies and solutions for the consultancy.
Justice explains the evolution of the internet from static Web1 to dynamic Web 2. Web1 of the 1990s and early 2000s was static content, created to enable users to find better information and search for data. Then, Web 2 emerged in the early 2000s as a new way to share content, interact and connect. It also introduced social media.
“If history is our guide, the future of Web3 may evolve in ways we cannot anticipate,” Justice suggests. “Web3 technology holds immense potential to revolutionise many use cases, such as the future of work, financial services, consumer brand experiences, and telemedicine.
“Unlike our current Internet, the metaverse relies on Web3 technologies and a ‘decentralised’ system facilitated by blockchain and digital wallets, meaning it is an open network governed by a community of users and fewer middlemen.
“VC and institutional investors clearly see the future potential of Web3 technologies, particularly as it relates to the metaverse. In KPMG’s recent investor perspectives survey, more than half of investors surveyed indicated they see a benefit in early investment in the metaverse. Particularly venture capitalists (63 per cent), as technologies and experiences continue to evolve.
“Seventy-five per cent of investors plan to maintain or increase their metaverse investments over the next five years. Further, about one-third (36 per cent) of investors say they have missed windfall opportunities from not investing or investing too little in metaverse technologies.”