What is Metaverse and how does it work?
A virtual reality focusing on the combination of social networking website, on line gaming, augmented and virtual realities (AR and VR), and cryptocurrencies – this is what metaverse is, allowing its users to virtually interact with each other.
The whole concept of metaverse is quite complicated to explain because of its sophisticated technicalities. However, what most technological specialists and experts see eye to eye with is that metaverse makes a broad line of connection where users are able to interact competently, venture in currency investments, take up courses or classes, have work, and even explore in the 3-D environment of digital reality through avatars.
Now that it is continually growing, it is highly probable that it will generate spaces on the internet world where the interaction between users will become more multi-dimensional than what is currently present on the technological industry.
Simply speaking, metaverse will make way for the users to surpass the features they are currently benefiting with such as virtual content viewing. Instead, customers may be able to experience a space where they can engage in both virtual and real worlds.
Financial Technology in the presence of Metaverse
An investor and financial technology entrepreneur, Sarah Biller, discussed the modernization occurring right now in FinTech brought about by metaverse. Biller is the co-founder of FinTech Sandbox. It is a non-profit institution that supports entrepreneurs in FinTech environment, especially startups.
As emphasized by Sarah, traditional and modern financial institutions like Fidelity Investments, JPMorgan Chase & Co., and American Express Company are thus far trying to experience the metaverse system.
- Fidelity Investments (earlier known as Fidelity Management & Research or FMR) – This firm provides financial planning and advice, retirement plans, asset management services or programs, and trading and brokerage services, and other financial services.Fidelity, as what they known for shortly, said that metaverse is the next big thing in the evolution of internet – more like its three-dimensional representation. More so, they pointed out that we are now at the most enormous moment when it comes to financial innovations, science, mathematics, and art – a Renaissance, we may say.
In comparison to the great developments by Michelangelo Buonarroti and Leon Battista Alberti had excellently fulfilled, metaverse is filling up the shoes of these artists well by following the same direction just as how Michelangelo and Alberti brought to perfection the usage of linear perspective in order to depict arts with three-dimensional depth.
- JPMorgan Chase & Co. – A multinational investment banking company and financial services holding company headquartered in New York City and incorporated in Delaware, United States of America.JPMorgan claimed that they are the first bank in the metaverse. They even provide education documents to their customers to fully understand the opportunities in the metaverse. This includes the difference of the metaverse in the perspective of it being just a hype, versus to what reality can offer.
- American Express Company(AmEx) – This financial technology company offers a wide range of services like charge and credit cards, gift cards, rewards, travel, savings, business services, and insurances.Now that metaverse has entered the picture, American Express is now developing a system where real world payment card services can work in the metaverse. According to the United States Patent and Trademark Office, the company also filed several trademark applications to patent their services in the metaverse.
We may not be able to estimate the opportunities metaverse can offer in the future, but looking at its growth today, the most accurate comparison we can go for when it comes to its value is the developments we had in the Renaissance period.
Financial Technology re-scoped financial services
CB Insights, a market intelligence platform that specializes in analyzing data points on venture capital, startup companies, patents, business partnerships and technological news, released a report on how financial technology is re-scoping financial services.
On the report, it was broadcasted that a year ago, in 2021, was investors’ momentous year as of yet. Greater than six hundred twenty-one billion US dollars (USD 621 billion) were invested, with approximately one hundred thirty-two billion US dollars (USD 132 billion) for the financial technology companies, alone.
This only pertains that one out of every five-dollar worth of investment last year went to the fintech industry to finance innovative ideas.
Brought by an avalanche of capital from investors, less expensive and universal virtual avenues (like smartphones and laptops) and positive customer experience in the face of non-traditional financial services throughout different businesses and industries, no one can disagree that we are currently living in the fastest and most advanced technology in the financial services.
Companies who are more open to innovations have adapted the new way of product and service delivery channels by using technological advancements that could integrate infrastructure and enhance human intelligence instead of going through the traditional approach. These fintech platforms from the innovative institutions are enabling the analysis and interpretation of customer information in an efficient and smart way. Meaning, these firms have been reaching additional customers through leveraged connections and efficient system and with even more products to offer.
We are not denying the fact that there are still a lot to consider and develop here; nevertheless, the most essential byproduct of this move is how the future of financial services will be – wider connectivity, companies’ cost cutting savings, and a more transparent system.
Fast-pacing move to virtual world
Financial technology has indeed brought changes and effects on the world’s financial services and other businesses and industries.
Taking banking industry as an example. It is continually going through great leaps in the past few years since financial technology keeps on changing the said industry in every aspect.
However, it is not only traditional forms of banking that seem to be fleeting.
For ten years approximately ten years ago, several fields and areas of financial services have benefitted from financial technology. Such services are payments, custody, rules and regulations, investments on retailing businesses, and real estate. Though some have also been affected by the crisis on global health, it is mostly that due to fintech that these services grew.
One can easily express that these financial services institutions and different countries where the strategy of having convenient and at the same time, real time financial solutions will have the greatest advantages of being on top of the innovative financial market in the next ten more years.
However, that may not be the most accurate assumption one can voice out. The correct reason why every corner of financial industry will advance may be because of the possibilities the metaverse holds once it is incorporated with financial technology.
The breathtaking technological advancements that is coming into financial services seem to be going in trajectory where the new road will be the utilization of even a lot more virtual technologies. Almost all participants in the fields and areas of financial services industry have long gone set aside analog practices, and instead, have switched to digital ones.
In fact, there are a number of countries and regions where the legal tender such as bills and coins have been reformed into more convenient and economical exchanging methods like central bank digital currencies, or CBCDs.
Metaverse as a bridge to reunite financial services industry
To explain briefly, the objective of metaverse is to operate in different ways inside its virtual ecosystem. That is, to enable its users to communicate with each other, have earnings, spend their money, and most noteworthy, merge their real world and digital assets. Its presence alone forces people to think of more secure ways of protecting identities, digital transactions, and asset possessions.
Throughout metaverse’s objective on interoperation, Web 3.0 and the metaverse is highly probable to reunite financial services industry that is currently struggling to re-enter the core of economical word, though it may be through the enveloping internet ecosystem.
What is Web 3.0? Also known as Web3, Web 3.0 is what experts can say as the “future of the internet”. It is a new web that is based in blockchain which includes cryptocurrencies, Non-fungible tokens (NFTs), decentralized autonomous organization (DAO), decentralized finance, and other financial technology programs. Web3 mainly provides a read / writes / own version of the World Wide Web wherein users are able to invest in the web community they are associated with.
Blockchain is one of the products of financial technology that will form a groundwork for the innovative financial world. Although a lot has been said about it being the future of the financial services, we can see that it is already becoming as such. It can be compared to that of the usage of clay tablet and cutting tool like chisel to build ledgers in the Mesopotamian civilization around 4000 BCE — or 6000 years ago to track the number of loaves of breads or jars of olive oil.
Simultaneously, the editor of Institutional Investor magazine, Michael Peltz published seven years ago, in 2015, that the advantage a blockchain can give is that you can do transaction in a minute and in no time, the global network is updated of the transaction that you made. In simple terms, it is convenient and you are assured that it moves in real-time.
Far from clay tablets mentioned earlier or spreadsheets, blockchain indeed confirms in real-time that an asset owned by someone can be transferred to another, or one’s identity are secured that is essential to a smooth, limitless, but advanced metaverse operational system.
Digital money that can be programmed have important responsibility in the metaverse and even the rules, regulatory, and legal concepts and constructs that determine (or do not) the latest benchmark of consumer protection program.
Today that metaverse goes beyond its line and participates in customary financial solutions excluding virtual world such as mortgages, the incorporation of currencies that brings about trust, acknowledgement, and security is notable.
It is backbreaking to predict what finance will be like in the future. However, one thing certain – it would not be as what it is presently.
What we can truly take note of is that financial technology and other new technologies will surely propel us to an even new virtual future in some such way. The metaverse may be indeed the heart of financial services in the next coming decades, and financial technology will support the new Renaissance artists to survive.