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Despite media reports that interest in the metaverse is waning, banks and payments firms are still engaged as the nascent sector moves on from its "hype phase".
This month, the Emerging Technologies in Banking report by Mobiquity found that fewer C-suite bankers are engaging with metaverse technologies, but the number of those who are is still significant.
In the UK in 2022, 56 percent of C-suite bankers said they were “engaged” with metaverse technologies, but in 2023 this number has fallen to 38 percent.
Following the publication of Mobiquity’s report, several media outlets claimed that this finding points to the beginning of the end for the metaverse.
Finextra, for example, said the concept has “failed to gain traction” and that the financial services sector “has begun to move away” from it.
However, looking at the wider concept of the metaverse and ongoing industry initiatives, including by PayPal and the card brands, the metaverse still seems to offer an untapped opportunity for banks and payment firms alike.
As Vixio heard from one expert, the metaverse is a far more “layered ecosystem” than the media tends to portray, and reports of its death are often greatly exaggerated.
“The metaverse is largely misunderstood as only an augmented reality (AR) and virtual reality (VR) experience,” said Surabhi Gawde, web3 and metaverse lead at management consultancy Capgemini Invent.
“But the metaverse is really a stack of multiple layers of experience, discovery, creator economy, spatial computing, decentralisation, device interfaces and infrastructure”.
Financial institutions in the UK “understand this and are building the right way”, Gawde added, “although slowly and steadily”.
Businesses and the metaverse potential
Although media outlets have reported in the past year that investment in the metaverse has “plummeted”, ongoing projects by several large market players suggest there may be further potential in the new ecosystem.
“The capability to transact objects of any value in the metaverse is in itself a business pie,” said Gawde, pointing out that Visa, Mastercard and PayPal are already offering a variety of metaverse on-ramp services.
“Visa and Mastercard have been consistently building the rails, depth of knowledge, products and services for their new role in Web3, crypto-enabled assets and eventually metaverse.”
Meanwhile, bankers in the UK “are yet to grab a piece of the pie”, said Gawde.
If financial institutions focus “only on AR/VR, then they are only exploring devices for virtual experiences, not the entire piece, not the entire tech stack with partnerships, and not the entire business pie that’s relevant to banking”, she said.
Over the past 18 months, several large banks, including HSBC, Citi and Deutsche Bank, have launched new projects related to the metaverse.
HSBC has already set up a metaverse fund for clients to invest in, and is exploring the creation of software for “facilitating secure payment transactions by electronic means in the metaverse and other virtual worlds”.
In addition, the bank is exploring fraud prevention, identity verification, virtual credit cards, NFTs, NFT-backed media, banking and business transactions in the metaverse.
Citi UK is taking part in the development of the Regulated Liability Network (RLN), a platform for the exchange of tokenised deposits and other forms of tokenised digital money.
“These examples imply that financial institutions do understand what their role is and what services they should build first to be able to thrive in virtual worlds to make money,” said Gawde.
“It is not simply about avatars, NFT drops, virtual lands or AR/VR devices when it comes to financial institutions.”
For a banker or payment processor, “the question of where the real money lies is something that these hype reports may be unable to gauge or bring forth yet”.
In the UK, it is estimated that about 7 percent of people have used some form of service in the metaverse, and the total size of the UK’s metaverse market will reach £1.85bn in 2023.
This includes the total value of spending on app purchases, advertising spending, and consumer spending on apps, games, items, and products, as well as hardware items such as headsets and glasses.
