Fintechs will play a key role in the metaverse
What we've been thinking: Facebook's rebranding as a metaverse innovator creates opportunities for companies looking to integrate fintech solutions into the next iteration of the digital realm.
What is the metaverse's relationship to fintech? The ability to manage finances and transactions in this new environment will be critical if Facebook hopes to make it as immersive and comparable to real life as it hopes.
- Over the last decade, easing access to financial services online, as Google has done with information and Amazon has done with consumer goods, has been a key driver of fintech innovation.
- People were encouraged to interact digitally more than ever before as a result of the pandemic, and fintech adoption skyrocketed: 88% of US consumers now use fintech solutions.
- Adoption of the metaverse, which Facebook Vice President of Global Affairs Nick Clegg describes as "a new phase of interconnected virtual experiences using technologies like virtual and augmented reality," will follow suit, with similar consumer expectations for access to financial services.
In the metaverse, how would fintech solutions look? Novi, Facebook's digital wallet app, was recently launched in the United States and Guatemala. Coinbase is assisting with the pilot by acting as the custody partner. This indicates that Facebook will use blockchain to power transactions in its metaverse.
The technology is already being used in emerging metaverses:
- Cryptocurrencies are used in video games. Video games were at the forefront of the "metaverse" long before the term became popular. Games make digital worlds more engaging by providing enjoyable gameplay that keeps users coming back for more. Cryptos are increasingly being considered by game developers for in-game transactions because they can boost sales through a play-to-earn model and function cross-border much more easily than fiat currencies.
- NFTs. By connecting their crypto wallets, Twitter intends to allow creators to share their NFTs on its platform. NFTs could enable creators to sell their content directly to consumers and build online communities, which would be essential in a metaverse.
How can fintechs capitalize on this? This space is still very nascent, and it’s unclear what a metaverse will look like.
- Fintech startups may benefit from integrating their solutions into Facebook's ecosystem as it positions itself as the gatekeeper to its own metaverse.
- Alternatively, larger fintech players may investigate creating their own metaverses. For example, Coinbase's upcoming NFT marketplace will include personal feeds based on each user's interests to help connect them with like-minded users and creators.
