Fintech allows for a stronger sense of engagement, autonomy, and boundlessness in the Fintech industry

A metaverse is a three-dimensional virtual cosmos that mixes augmented and virtual reality with social media technologies to create a simulated digital environment at its most basic level. For some in the digital world, particularly in video games, the concept of the metaverse is simple. Whether it's the (often) mild-mannered virtual landscapes of simulation-based games or the action-packed digital worlds of RPGs and shooters, gamers have long admired the concept of choosing a character and entering a reality vastly different from the actual one. The degree and types of technology used in the metaverse are unique, allowing for a stronger sense of engagement, autonomy, and boundlessness. What's also unique is the increased interest by non-game firms in discovering new ways to make money.

Mark Zuckerberg and crypto fanatics have one thing in common: they both enjoy the metaverse. Their vision for the metaverse, on the other hand, might be entirely different – leading to far-reaching implications for fintech and digital financial services. The metaverse, which is envisioned as a 3D virtual environment that allows users to engage in virtual socializing and virtual enterprises of all kinds, it is still a long way from being a cohesive, completely immersive virtual reality. Is it merely a speculative crypto-fuelled craze, or is the hype ever going to meet reality? And yet, as investment companies and Big Tech spend vast sums of money on constructing these fledgling virtual worlds and ecosystems inside them, the basis for a massive shift in payment systems and commercial connections is being laid.

This virtual environment of the metaverse has spurred a desire among financial entrepreneurs to explore how fintech and new fintech solutions may deliver financial services in this completely new universe, just as it has in many other industries. The use of metaverse technology to develop new business models may pave the way for crypto to become a large-scale alternative financial system. Other major and small financial firms are also attempting to create digital worlds. These kinds of digital financial ecosystems can enable metaverse activity and transactions.

Metaverse and financial services

Audiences at Finovate have already seen how financial services firms can take advantage of many of the capabilities that make the metaverse feasible. eBankIT showcased how it was using augmented reality technology to bring printed papers to life on smartphone displays back in 2015. In 2017, we looked at how proptech companies were using virtual reality to provide virtual walkthroughs of both existing and upcoming properties. Mastercard released an augmented reality app in 2020 that gave users a virtual tour of three incentive categories. "Every day at Mastercard, we use our technology and solutions to offer multi-sensory experiences for consumers," said Raja Rajamannar, Chief Marketing and Communications Officer at Mastercard.

Fintechs and financial services firms have grown increasingly aware of the metaverse's potential. Earlier this month, eToro announced the launch of its MetaverseLife service. MetaverseLife is a new smart portfolio that exposes investors to enabling platforms like Meta Platforms and Roblox, as well as cryptocurrency and blockchain-based platforms like Decentraland and Enjin. While many are eager to point out the contrasts between online gaming worlds and the metaverse, Microsoft's $68 billion acquisition of game business Activision earlier this month was a big shot across the bow for those who dispute the metaverse's high priority among computer corporations.

Social media and video game firms are at the heart of the metaverse's capabilities, leveraging their massive user bases, creativity platforms, interactive digital events, and cutting-edge hardware to lay the metaverse's foundation. While virtual reality, digital assets, blockchain, cryptocurrencies, and, more often, video games appear to be the emphasis, the metaverse will provide far more comprehensive and infinite prospects for numerous businesses. Whatever shape the metaverse eventually takes, it will necessitate technical advancements in infrastructure, consumer-centric devices, platforms, and other areas.

The future of Fintech in the Metaverse

• Virtual Interactions: The most likely way for financial services organizations to engage with the metaverse at first will be through virtual interactions with consumers. As previously mentioned, numerous fintech and financial services firms have taken preliminary steps in this direction by using AR/VR technologies. Few, however, have carried the notion as far as Korea's Kookmin Bank, which constructed a "virtual town" on a metaverse platform that included a commercial center, a telecommunications hub, and an entertainment area.

• Virtual training: This type of metaverse deployment can be utilized as a training environment for financial services personnel in addition to providing customer-facing capabilities. It's simple to envisage financial institutions creating and supplying virtual environments to allow their wealth management teams, financial crime and regulatory staff, and others to further enhance their talents.

• Virtual business: We should expect a profusion of enterprises catering to the financial demands of metaverse residents to the degree that the metaverse has its economy. Financial data management companies and financial infrastructure companies whose job it will be to help facilitate value exchange in the virtual environment, as well as digital identity and authentication providers – to say nothing of innovators like Soul Machines – will all play a significant role in such a world. Companies that create virtual assistants and other AI-powered agents for financial services will undoubtedly be important in the metaverse's development.