Finance / Fintech + Metaverse, What Will We Get?

Finance / Fintech + Metaverse, What Will We Get?

An increasing number of companies from a financial / fintech background are venturing into the metaverse, a concept that has been gaining incredible popularity these years. Fazzaco has exclusive stories previously on this topic. Nevertheless, the idea itself, is more imaginary than real since a lot of the required key technologies are still far beyond human’s capabilities. Most of the finance / fintech firms announcing their metaverse moves are mainly exploring technologies and scenarios. For the industry, the concept of metaverse is more of a supplement to the existing services and extension of scenarios.

So, what will we get from the combination of finace / fintech + metaverse, what will the development path look like?

- A look at metaverse-embracing finance / fintech firms

HSBC has ventured into the metaverse ​ by acquiring virtual real estate in the Sandbox in March 2022, following J.P Morgan’s opening of a lounge in Decentraland, a bold step into the new realm for business opportunities.

In March 2022, SCB 10X, the investment arm of Thailand’s fourth-largest bank by total assets, Siam Commercial Bank (SCB), is also joining the list of major financial institutions that enters the metaverse by setting up headquarter within the Sandbox.

Now let’s take a look at fintech firms. In February 2022, Sokin, a next-generation payments provider, for the first time in the metaverse, will enable complete ecommerce payments, allowing brands and enterprises to expand their physical shop into the virtual world.

Traditional payment firms like American Express are, too, boosting their metaverse Domain Name Is Available to Buy — Domain Name Marketplace March, the payment giant has filed trademark applications, for which Centurion black card and the “Shop Small” initiative are among the involved logos and goods. Amex is also looking on virtual payments and electronic business transactions for non-fungible tokens (NFT) and digital media.

- Path of development for finance / fintech firms in the virtual world

At present, it looks like metaverse is inclined to drive the development of social media, video games, cryptocurrencies and fashion businesses, involving virtual reality, digital assets, blockchain, NFTs and gaming. We don’t see a whole lot of overlapping with finance, in addition to cryptocurrencies.

However, metaverse will eventually generate opportunities, almost infinitely, for all industries, including finance. No matter how this virtual world will shape out, it still requires breakthroughs from infrastructure, consumer-centered hardware, ID verification and platform technologies.

As of now, we are in a stage where metaverse is still conceptual, and we are far from having any technological or applicable results. Therefore, financial businesses may facilitate innovations of marketing from the following aspects, such as virtual broker, gaming experience and better trading experience by combining virtuality and reality.

People’s fever will fade out when metaverse finally enters real development, which means less gimmicks and more valuable moves during this stage. At this time, metaverse might become a core channel of data acquisition and management for the finance industry.

When metaverse finally becomes a reality, all the applied experiences in the finance industry over the years would undoubtedly bring earth-shaking changes to finance. It’d be a time of both challenges and opportunities.

- The very core of finance will remain unchanged

For financial businesses, take banks / brokers as examples, their typical service scenarios, customer experience, operation, management and even the entire ecosystem will be restructured in the metaverse. For customers, trading would be truly free from space and time, and become complete online services. In particular, as the world is ravaged by the Covid pandemic these years, people are now more willing, than any time before, to accept online trading and digital services, and consequently, fintech is booming worldwide. Statistically, about 88% U.S consumers are currently using some sort of fintech solutions.

Metaverse will construct a massive society that is parallel to the real one. In this virtual world, not only will the finance industry be given more diverse business models and scenarios, but also people will be able to trade real estates, products and fashion items etc. It means that, as the digital version of the real world, the virtual finance will remain its core unchanged. The key value provided by metaverse is about higher efficiency and better quality.

- What the future holds for finance / fintech

Financial trading lies in our instincts as humans, and it will continue to exist in a future virtual world for sure.

Different issues will emerge in the metaverse, too, client ID verification in particular — where a client enters a trading spot in an avatar, which can be easily hacked and used for scams — such technical issues shall be immediately addressed by fintech businesses when metaverse becomes real.

In addition, with the acceleration of the digitalization of finance, the decentralization process, and the development of cryptocurrency, all driven by metaverse, it is possible to say that the founders of the financial system in the virtual world might not be actual financial institutions in the real world, but the founders of the virtual society, especially the operators or gaming platforms that own a great deal of clients.

At last, it is possible that a new monetary system will emerge as the metaverse is detached from the real world socially. Hence new currency pair trading, or completely new forex trading.

- Conclusion

As an open ecosystem, users in the metaverse are allowed to construct an economic system freely. But as a part of an economy, financial facilities will still be an integral part. Undeniably, there is still a long way for metaverse to figure out how to construct and operate its financial system, and there will be numerous obstacles along the way.

Despite all the uncertainties and complexities — especially for financial businesses that are venturing into the metaverse, risks can never be ignored — the financial future of metaverse is still worth looking forward to.