How the fintech industry can embrace the Metaverse

Recently, the metaverse has been making global news. Before proceeding any further, one needs to define the concept for lay readers. Broadly, the metaverse could be defined as a three-dimensional virtual reality universe wherein users can work, shop, socialize and play, much as they do in real life – except that here it happens online. Since it combines both the virtual and the augmented reality, it simulates a graphically rich digital environment. 

In the past couple of years, the digital medium and the social media have been accepted by millions worldwide, driven more strongly by pandemic-linked tailwinds. This has transformed how individuals and institutions work and behave, impacting human life majorly across the globe – which is an ongoing transformation process. 

Benefitting Individuals and Institutions

Where enterprises are concerned, the pandemic steered changes towards virtual spaces. Here, blockchain and cryptocurrencies are manifestations of the same. Consequently, creating a digital presence and the use of digital assets for both individuals and businesses is assuming importance. 

Simultaneously, the world of tech tools and virtual reality is finding greater resonance with many BFSI players, particularly fintech firms that are digital natives. Fintechs and other financial services entities are turning increasingly receptive to opportunities through the metaverse, which provides a greater sense of autonomy, vastness and direct participation. These companies are especially interested in discovering whether the metaverse can offer ways to enhance customer engagement by going beyond the physical storefronts or smartphone-based apps. 

Much like the pre-platform Internet, the metaverse won’t be a singular platform but rather a space where no single entity will hold complete control over participants’ experience and data in this virtual universe. In this way, the metaverse will be more akin to the Internet in its early-phase unlike the categorized Net of today’s social media age. 

In the metaverse, one of the objectives is to build a domain where the content of experiences is easily transferable from one sphere to another. Presently, any experience in the digital world is segregated within that domain. In the metaverse, however, users will be able to transport their experiences and data between different simulated environments. 

In the case of financial services, these companies will use the metaverse to interact with the customers. Many financial services and fintech players are already taking tentative steps in the metaverse via AR and VR tools. 

Since the metaverse will possess an economy of its own, there will be myriad businesses serving the financial needs of users. In this universe, blockchain and other digital asset players will be critical while those developing virtual assistants and allied AI-enabled financial services agents would also be important. Authentication and digital identity services, financial infrastructure and data management companies will also have a significant role in facilitating value exchanges in this virtual environment. 

Boundless Possibilities

Meanwhile, digital banks are establishing their versions to support financial services in this virtual universe. Though some analysts are surprised why fintechs are embracing the metaverse, as it is associated more with gaming and entertainment-based companies, there is nothing amiss in their move. While brick-and-mortar banks are losing ground to fintechs, financial institutions still wish to provide customer’s personal services with direct human engagement, which is possible through the metaverse. 

Today, the metaverse heralds a revolutionary transformation in digitalization that is poised to provide significant business opportunities in financial services. Currently, though the metaverse remains far from fully explored, fintech startups stand to benefit from the integration of real and virtual worlds. 

Indeed, the major fintech players could even establish their parallel versions of the metaverse, much like Coinbase did in creating its NFT market. Given its availability and simplicity, the number of people engaged in the trading of NFTs is slated to rise substantially in the coming days. 

Propelled by the metaverse’s limitless possibilities, much like the gaming segment, the fintech industry is being perceived as an interesting sphere for exploration. What’s more, the metaverse allows tech-enabled companies to meet, share experiences and collaborate in this virtual universe via predesigned recreation zones and business centres. Similarly, as the payments ecosystem becomes more diverse and simplified, the metaverse will permit companies to attain more partners and customers. 

As the online and offline worlds merge in the metaverse, fintech firms could drive more enjoyable experiences and greater customer satisfaction levels. Higher transaction volumes and long-term brand loyalty can then emerge as one of the most productive outcomes for fintech players. 

The article has been written by Maninder Singh Grewal, Chief Growth Officer, mPokket