Imagine you have a digital twin, a digital avatar or an online version that can live, work, shop, transact, play, socialize and interact with others, attend or host a finance, treasury or sporting event, collaborate with avatars of your investors, colleagues or clients on the other side of the world, explore and experience cities, countries and hotels before deciding on an actual trip or confirming a booking – all from the comfort of your couch at home, work desk, computer, gaming console, smart phone, virtual reality headset, smart glasses or even electronic contact lenses.
Welcome to the metaverse, where without taking a step outside your front door, you can seamlessly integrate the physical world with the virtual world, and where you will enter a digital world that appears so real that you wouldn’t know if it’s digital rendering or a reality. According to Gartner, Inc, by 2026, 25% of people will spend at least one hour a day in the metaverse for work, shopping, education, social or entertainment.
30-year-old book predicted the metaverse
The term “metaverse” was first coined in “Snow Crash,” a science-fiction novel published in 1992. Author Neal Stephenson imagined a world where humans interact with each other as digital avatars in an online virtual world that has been built to resemble the real world.
Metaverse, AR, VR and NFTs
Non-fungible tokens (NFTs) are crypto assets, digital assets or cryptographic tokens that can be bought or sold using blockchain technology (blockchain verifies NFT ownership). NFTs are hailed as the foundation of the metaverse economy because they allow you to purchase and sell digital assets, from art to real estate.
Augmented reality (AR) and virtual reality (VR) are keys to providing a more immersive experience in the metaverse. According to the IDC Worldwide Augmented and Virual Reality Spending Guide, “Worldwide spending on AR and VR is forecasted to grow from just over $12 billion in 2020 to $72.8 billion by 2024, with the five-year compound annual growth rate (CAGR) for AR and VR spending estimated to be 54%.”
NFTs can help transform AR and VR experiences and content into verifiable assets, making them easier to access, buy and sell supported by blockchain technology. NFTs are the bridge to the metaverse and can be utilized by people to explain their identities and communicate with others in the metaverse.
Combined with NFTs, AR and VR can potentially bridge the gap between the traditional creator economy and Web 3.0 (the next generation of the internet based on blockchain technology that aims to shift power from big tech companies to individual users).
Metaverse: The next big tech and business opportunity
Mark Zuckerberg's Meta (Facebook) says the metaverse will be “the biggest opportunity for modern business since the creation of the internet.” JP Morgan Chase predicts that the metaverse will become a US$1 trillion market opportunity in yearly revenues. Chase’s rival, Goldman Sachs, has pegged that the metaverse could be an $8 trillion opportunity. Citi, the most global of the big US banks, is bullish on the metaverse as well.
Citi’s new Global Perspectives & Solutions (Citi GPS) report titled Metaverse and Money: Decrypting the Future estimates the total addressable market for the metaverse to be between $8 trillion and $13 trillion by 2030, with total metaverse users numbering around five billion. As per the report, “Metaverse is moving towards becoming the next iteration of the internet, or Web3.”
Metaverse presents enormous potential for the financial services industry
Global financial institutions JP Morgan, HSBC, Standard Chartered Bank and American Express have forayed into the metaverse business. South Korean banks such as Shinhan Bank, KB, Hana, Woori and NH Nonghyup are also stepping into the metaverse. Thailand’s biggest bank by market value, Siam Commercial Bank will be setting up shop in the metaverse, and so will be Singapore’s largest bank, DBS Group.
While traditional banks are entering the metaverse, they now have a competitor in a new decentralized bank, Meta Bank Defi, which is the world’s first decentralized 360 solution bank in the metaverse. Meta Bank intends to create a cross-platform mixed reality metaverse district that will include a virtual bank, healthcare, gaming, casinos, a virtual NFT marketplace, art, entertainment and more.
JP Morgan, HSBC and Standard Chartered Bank have bought virtual land in the metaverse. Other banks are expected to follow suit. Some banks have bought a virtual land plot to open a bank branch in the metaverse, and also because they are eyeing real estate ownership, sales and prices of which are skyrocketing.
At the moment, The Sandbox, Decentraland, Cryptovoxels and Somnium Space are some of the most common platforms selling virtual real estate. Real estate sales on the four major metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions, and sales are projected to reach nearly $1 billion in 2022.
According to JP Morgan’s metaverse report Opportunities in the metaverse, released in February 2022, the bank forecasts that in time, “The virtual real estate market could start seeing services much like in the physical world, including credit, mortgages and rental agreements. However, with the emergence of decentralized finance (DeFi), collateralized lending primitives and the composability of blockchain token-based digital assets, a next-generation financing company could potentially leverage digital clothing as collateral to underwrite virtual land and property mortgages.”
Banks intend to leverage the metaverse to onboard customers through crypto wallets and provide lending, payments, collateral valuation and custody services. Financial services providers can also offer clients insurance, secondary market trading, financial planning and investment services, including retail and electronic banking services that will facilitate their ability to check balances, pay bills, make transfers and transact using AR and VR channels.
Corporations eye metaverse
“By 2026, 30% of the organizations in the world will have products and services ready for metaverse,” said Marty Resnick, research vice president at Gartner.
“Enterprises will have the ability to expand and enhance their business models in unprecedented ways by moving from a digital business to a metaverse business,” commented Resnick.
As a result, corporations are already building ways for users to replicate their lives in digital worlds. Microsoft, Walmart, Boeing, Siemens, Nike, Disney, Gap, Gucci, Burberry, Verizon, Hulu, Adidas, Atari and many more organizations are moving into the metaverse. These include tech giants, smart manufacturing, fashion brands, consumer products, retailers, health care, payments, education, entertainment, tourism and gaming organizations.
The availability of technologies such as VR, AR, blockchain, NFTs, crypto, high-speed 5G technology, and the widespread acceptance of remote work and online socialization are all accelerating the adoption and growth of the metaverse.
Experiencing virtual corporate events and meetings spanning numerous industry verticals, training in surgical procedures, delivering workforce upskilling and training, digital discussions on financial-related services with corporate bankers, buying and wearing digital clothing (dress your digital twin) and more – all from the comfort of anywhere, home or office, may lead to the convergence of the physical and digital world for companies and their stakeholders.
“From attending virtual classrooms to buying digital land and constructing virtual homes, these activities are currently being conducted in separate environments. Eventually, they will take place in a single environment – the metaverse – with multiple destinations across technologies and experiences,” observed Resnick.
JP Morgan’s recent metaverse report states that “Business leaders and boardrooms around the world are now asking themselves, what is my metaverse strategy? What am I supposed to be doing in the metaverse?”
The metaverse is early in its evolution. However, the opportunities it presents for corporations seem limitless, and in the near future, the metaverse will likely impact every business that consumers interact with daily.
JP Morgan believes that the metaverse will also provide a massive opportunity for business-to-business (B2B) enterprises. Its metaverse report explains its reasoning: “Take a manufacturer that is buying new parts for its equipment. Presently, the process involves receiving a physical brochure or an emailed PDF with static 2D pictures. In the metaverse, users could test the products in a virtual environment at lower cost. Imagine being able to build a complex digital twin of a factory or industrial space at massive scale, and test how robotics systems will interact with the physical environment.”
Privacy and cybersecurity concerns
As the buzz around the metaverse gets louder, there are privacy and security concerns, particularly regarding the collection of biometric data.
VR headsets and technology can collect more data about us than traditional screens, and this can give governments and organizations unprecedented access to citizens’, customers’ and employees’ brains, behaviour and homes, providing more opportunities to share the data for profiling, measuring attention and advertising. This could lead to a higher amount of privacy infringement and data-invasion, particularly when we still haven’t answered most of the privacy problems we already encounter in our lives.
Cybercrime in the physical or real world is already rampant. Now organizations have to solve for them as well as address the security vulnerabilities and threats that affect the metaverse. Security experts believe that social engineering attacks, ransomware attacks, network credential theft and identity theft are the leading security risks that could dent confidence in the metaverse platform.
Nevertheless, organizations that stay committed to stringent security and privacy norms and consider it crucial to address safety and intrusion concerns as part of building their metaverse presence responsibly will retain the competitive advantage in the virtual representation of a real world.
The metaverse is still in its formative years and yet is picking up steam around the world. As more companies embrace the virtual world, and competition intensifies for metaverse domination, it may change the way organizations and individuals interact, transact and collaborate.
Today cryptocurrencies are the metaverse’s money, but this may change, as per the Citi GPS report. “The Metaverse of the future is likely to encompass more digitally-native tokens, but also embed traditional forms of money. Money in the Metaverse could exist in different forms, i.e., in-game tokens, stablecoins, central bank digital currencies (CBDCs), and cryptocurrencies.”
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