In today’s Exponential Investor:

  • The metaverse is a lot to do with gaming and virtual reality (VR) goggles…
  • … but it could have a lot to do with retail banking and customer experience
  • There are some important challenges to be overcome if 5 billion people are to get involved

At the Golden Globes (or the Cannes Festival or the BAFTA awards), it is unusual for people to muse about what could be the really hot topics in two years’ time.

At Money20/20 Europe, however, Sam and I met with many finance professionals who were ready to look at their crystal balls and talk in detail about the next big financial trends.

Like day one of this landmark fintech conference, which you can be reminded of here, day two of Money20/20 Europe gave some very interesting insights. 

What the metaverse is today

One of the main themes of day two was the metaverse.

The term alone is enough to spark curiosity and intrigue amongst those who are yet to understand its full potential.

“Meta” translates to “beyond” from the Greek language, whilst the “verse” aspect refers to the universe.

As the name suggests, the metaverse goes far beyond the boundaries of the physical world.

It’s a portal to a new, immersive virtual reality (VR) world, that can offer boundless financial and social opportunities for its users.

For example, the metaverse can allow users to meet and collaborate through the use of virtual avatars.

It can also allow users to exchange and monetise assets such as physical land, in the form of non-fungible tokens (NFTs). NFTs are essentially an immutable, digital version of real-world objects underpinned by blockchain technology.

There are several iterations of the metaverse, with several existing across crypto networks and traditional finance-based (TradFi) institutions.

For example, Meta Platforms (formerly Facebook) has introduced its own metaverse called Horizon Home. It’s a VR environment, where friends can interact and play games. It’s accessible through Meta’s Oculus Quest 2 headset. Headsets and VR goggles are one of the main ways in which metaverses can be accessed and enjoyed.

Crypto network The Sandbox is also one of several cryptos that has its own metaverse. Principally, its users build and monetise gaming experiences on the Ethereum blockchain.

The metaverse is incredibly versatile. It accommodates several exciting technologies of the modern day, including VR, blockchain and NFTs, whilst acting as a bridge between physical and virtual worlds.

The crossover of these revolutionary technologies has created an opportunity which extends far beyond just gaming and social interaction.

What the metaverse could be in the future

At this point in the discussion, you could be forgiven for asking what all this has to do with fintech.

However, and as I found out at Money20/20 Europe, it could drive a new level of efficiency in the financial services industry and help it stay relevant to the times.

For example, the metaverse could offer banking customers the chance to check balances, pay bills or transfer payments using VR channels.

It could also drive deeper engagement between banks and customers, whilst limiting the need for in-branch visits.

What’s more, it could also take on a growing role as a place where traditional finance (TradFi) institutions based mainly on fiat currencies meet with decentralised finance (DeFi) networks based on cryptocurrencies.  

I listened in on a talk from Steve Suarez, Global Head of Innovation at HSBC.

He spoke optimistically about the metaverse, and made reference to HSBC’s venture into the metaverse in March this year.

HSBC has bought a plot of land in The Sandbox metaverse (for an undisclosed amount), as it seeks to create “new brand experiences” for customers.

HSBC is also planning to close 69 of its global banking branches as it pivots towards digital banking services.

We must add that the metaverse is still at a very early stage, and that many use cases for the metaverse are still being explored.

However, the fact that several large TradFi institutions such as HSBC are exploring the possibilities of the metaverse suggests that it could develop further – and in different ways – to what people have been expecting.

In fact, according to Gartner Research, one quarter of us will spend at least an hour a day in the metaverse by 2026.

Investment firm Morgan Stanley estimates the metaverse economy could reach a valuation of $8 trillion.

What needs to happen

What’s clear is that the key to unlocking the potential of the metaverse will be creating interoperability amongst them.

That is, having the correct infrastructure to unify economies, avatars and technologies from multiple metaverses into a fully-functioning system.

Without this, it will be difficult to achieve the immersive, universal world that the metaverse seeks to create.

Another roadblock to metaverse adoption is ease of accessibility.

For example, according to Suarez, the metaverse only has an addressable market of 1 billion users if access is largely consigned to users of VR headsets. Allowing seamless metaverse access through phones and computers could increase the addressable market to around 5 billion and create a larger opportunity for those seeking to capitalise on the metaverse opportunity.

Let’s be clear… it is unlikely that the metaverse will completely replace real life.

Rather, it will likely become a supplement to our everyday existence, and drive a new level of efficiency and engagement amongst financial and social networks that was previously unattainable.

There will be opportunities. You can be sure that we will cover them here at Exponential Investor.

Watch that space…

Until next time,

Elliott Playle
Contributing Editor, Exponential Investor