Metaverse city skyline

Banks across the world are looking for opportunity in the metaverse, as hype builds around the new technology. Bill Lumley reports.

The high rate of new metaverse start-ups appearing in the banking and financial services sector is showing no signs of slowing, with a growing number of major accelerator programmes announced around the world in the last three months.

These launches support forecasts of rapid growth in the metaverse in a recent report by Citi, which predicts that the value of the metaverse to reach $8tn–$13tn by 2030.

Initiatives abound

In June, Italian private bank Banca Sella Group launched Metaverse 4 Finance, described as the first Italian acceleration programme aimed at start-ups focused on metaverse finance. The initiative, aimed at national and international teams, focuses on developing innovative solutions and technologies in this field. The programme was fostered by the bank and developed by its venture incubator dpixel.

In Johannesburg this month, plans were announced to launch Africarare, the African continent’s first metaverse, which promises to boost the economy and create jobs. Mic Mann, Africarare’s co-founder and CEO, says: “Our metaverse will connect Africa to this booming arena in the global economy, stimulate growth and create multiple new jobs, such as digital designers, creators and architects.”

In another such initiative in August, Emirates NBD launched a metaverse start-up accelerator, which it claims is set to support more than 40,000 virtual jobs by 2030, boosting the region’s economy by $4bn in the next five years. The UAE bank’s new campaign is operating in conjunction with technology partner Microsoft and accelerator partner DIFC FinTech Hive.

It follows the announcement by Dubai of its ambition to become one of the top 10 metaverse economies by creating the region’s largest ecosystem, through the launch of the Dubai Metaverse Strategy.

Web 3.0

Miguel Rio Tinto, Emirates NBD chief information officer and chief digital officer, says that Web 3.0 – a new iteration of the internet based on decentralisation – facilitates the metaverse and opens up possibilities for autonomous decentralised technologies within the internet ecosystem. It enables creators and users to control their online identities and their digital assets and, according to Mr Rio Tinto, allows for accelerated value creation, exchange and transfer.

“We want to be in the metaverse, especially because in Dubai and the UAE we have been pioneers in establishing the virtual asset regulatory authority; the first government in the world to establish an authority to regulate virtual assets,” he says. 

Ali Rey, senior vice-president of technology platforms at Emirates NBD, says that over the past three years the bank has invested in building a modern stack for its technology and application architecture. Its digital transformation is “unprecedented in the financial services industry”, enabling the first private cloud in the region. “It has also enabled the bank to move to a cloud native application base that will reduce technical debt over time,” says Mr Rey, adding that the advent of world class technology environments, coupled with the establishment of 5G, has set up a perfect storm for Web 3.0.

The UAE bank is looking with its partners to find inventors, founders and start-ups to help develop metaverse applications. “Our challenge is simple: to find the best organisations around the world that are working on these fundamental building blocks of technology that enable the metaverse,” says Mr Rey.

It is not just banks that are exploring this area. In July, consultancy firm KPMG US, with its Canadian sister company, launched the Metaverse Collaboration Hub, which it says is the next step to leading its staff and clients to Web 3.0. As Laura Newinski, deputy chair and chief operating officer at KPMG US, says: “The metaverse is a market opportunity, a way to re-engage talent.”

Brave new world

The Citi report meanwhile suggests the definition of money in the open metaverse is likely to differ dramatically from what counts as money in the real world today. “Different forms of cryptocurrency are expected to dominate, but given the multi-chain trend in the crypto ecosystem, cryptocurrency will likely coexist with fiat currencies, central bank digital currencies and stablecoins,” says the report.

But it warns that if the metaverse proves to be the new iteration of the internet, it is likely to attract greater scrutiny from global regulators, policy-makers and governments. Issues such as anti-money laundering rules for exchanges and wallets, the use of decentralised finance (DeFi), crypto assets and property rights will all have to be addressed, according to the report.

JPMorgan recently predicted that every industrial sector will be infiltrated by the metaverse in the coming years. While there are growing calls for regulation of this new virtual reality environment, financial services organisations around the world appear to be on the case. As the report suggests, there is an expectation for DeFi and existing traditional financial systems to coexist for some time in the future.

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