The Metaverse – or Metaverses? – may have an impact on how organizations interact with customers and citizens in the future, including in day-to-day services, such as banking, finance, and retail.
Precisely how that will happen remains unclear, as any business model that revolves around non-gamers wearing headsets for hours on end seems like a tough sell. In their current bulky form, headsets are both entry points and barriers.
Despite this, there have been some exciting applications in unusual sectors. These point towards useful outcomes for more mainstream businesses, and not all of them come from gaming, or from world-building platforms like Roblox.
For example, scientists at NASA’s Jet Propulsion Laboratory in Pasadena, in the hills above LA, have long been able to meet global colleagues on a virtual Mars. This digital twin of the Red Planet is accessed via Microsoft’s HoloLens headsets using data pulled from orbiters, landers, and rovers on the surface. Pick up any virtual rock and insights about it are available to examine and discuss: every pixel is data rich.
The utility of such a niche application is obvious: it saves the colossal expense, risk, and time of going to Mars for real. Expand that principle to other massive, complex, or dangerous environments and you can see the advantage of being able to explore them safely, collaboratively, and virtually, using real-time data.
CERN’s Large Hadron Collider is one example, every component of which exists as a digital twin, to which predictive analytics can be applied. Others might include oil rigs, nuclear power stations, smart factories, war zones, and even a human body or the interior of a jet engine (for precision surgery in both cases).
Tourism or property-viewing might be other environment-friendly applications, or mapping the flow of travellers through airports and other hubs.
Simulated environments could have countless internal uses too: training airline pilots, racing drivers, and the users of complex machinery, for example, or onboarding employees in a multinational.
Yet all these examples – both real and notional – are immersive digital twins rather than metaverses. The term ‘Metaverse’ implies a virtual universe, one that transcends physical limits. Such a realm might contain millions of digital twins.
But apply that concept to more mundane environments, such as shops and retail malls, or to industries like banking, finance, and insurance, and suddenly it seems faddy, improbable, and over-engineered: a complex solution in search of a simple problem.
Why walk around a virtual Walmart or Bank of America if you can just go to a Web store, or click on your mobile-finance app and get what you need in seconds? The question alone implies that your metaverse presence should offer something new.
Despite all these caveats, financial services should be in the vanguard of exploring the Metaverse, according to industry body techUK. One reason is pragmatism, said speakers at a webinar on 9 February: you’ve got to be in it to win it. But would there be any practical benefits beyond that?
Ashok Maharaj, is Head of the Extended Reality Lab at Tata Consultancy Services. He says:
Inclusion [is a key benefit]. The Metaverse opens up enormous opportunity for us to look at how different communities in underdeveloped areas will be able to participate. And there is a whole lot of consumer behavior that is going to be shaped because of this coming of the Metaverse into financial services.
That inclusion might extend to making luxury lifestyles more attainable in a virtual realm, he suggested: a complex and, in some ways, troubling idea.
Digital currencies might find their natural home in a metaverse, he added – despite the gradual disintegration of Facebook owner Meta’s own forays into tokens via Libra and, latterly, the Diem Association. (Facebook was so confident that users would want to stretch their legs in its own metaverse that it rebranded itself around it, a decision that currently looks questionable rather than prescient.)
Ruth Maria Bousonville is Legal Director at multinational law firm Pinsent Masons. She says:
The Metaverse means, in the first place, everybody's going to try to grow revenue, and that means they will need ways of receiving money from the people using the platform.
So, I think that's the most important implication for the financial services sector. Firms will need to make sure that there's a payment method, and that does not just mean cryptocurrencies. There must be easy ways of paying for any kind of service, digital assets, or whatever is offered in the metaverse.
At the same time, financial services firms will also need to make sure that they still comply with regulatory requirements, when the same services are offered outside the Metaverse and carry the same risks.
There's no doubt that any regulation that's out there in the real world – not just financial regulation, but also consumer protection, data protection, and security – will still apply in the Metaverse. And it will be quite an effort to make sure that FS firms will be able to meet all those requirements.
This raises some interesting questions: many regulations are national or regional, of course, while others are focused on industries. So, how would regulations be applied globally in a virtual universe? One that resides in a data center built on land under local laws? (Picture Brexit UK in a Metaverse, with a regulatory environment that aims to be at odds with the rest of Europe.)
But the most imminent challenge from a legal perspective is less the regulatory one. It's very much intertwined with the factual situation of where we are. There is no one Metaverse; there are lots of Metaverses. And as far as I can see, you cannot simply move from one to another with your assets, not even with your avatars.
This implies that the rise of different Metaverses, in which a single customer might have presences, would be like trying to access dozens of private-members clubs, each with distinct credentials and identities. Interoperability would become critical, as would the risk of customers’ back-end data being open to attack from dozens of different platforms.
She goes on:
When the GDPR was introduced, the data portability clauses part… I don’t even see that these have been implemented yet. So, the biggest obstacle, actually, will be the convergence of these many different Metaverses. Because when you look at it from a legal perspective, what a metaverse is, it's based on contracts. You have an operator.
An excellent point - banks setting up shop in another provider’s Metaverse would have to sign a contract agreeing what they could offer users, who would be customers of the Metaverse first. This begs the question, how many different metaverses would any company want to join, and how interoperable would those presences be?
Having multiple presences in different metaverses could be a nightmare for developers, and from operational, strategic, management, and security standpoints. It would also be a barrier to entry. And for the customer, how much of their financial data would they be giving away to each metaverse provider?
Theoretically, some distributed ledger technology could administer a metaverse, but in any case, it's one where there would be boundaries.
Get in early
Steve Suarez is Global Head of Innovation at Europe’s biggest bank, London-headquartered HSBC. In these early days of Metaverse experiment and exploration, he urged the banking sector to take an active, engaged approach.
[Financial services companies] are going to view it as just another channel. It's another way for them to be able to interact with their customers and with employees. So, it does offer us a more immersive way, a different way, to interact. It's incumbent on us to understand the technology and its capabilities, and figure out ways that we can enhance it and enrich that experience with our customers.
It reminds me of the early 90s when I was trying to explain to people what the internet was. You don't want to get in when everything is robust, and everything is done. You want to get in at the beginning, understand the technology, and grow it from there.
So, it's important that organizations get in now and understand it. Put together a Metaverse strategy that takes in six months, then one to three years, and think really big and far. Put together a governance board. […] You’ve got to anticipate all the risks – and the opportunities. The people who start now, we're going to be pioneering what those business cases are.
Ever since we went more digital, we [banks] have often taken the human out of the equation. And what the Metaverse does is, you could still be digital, but you can put the human back in and create engagements with people, because it doesn't matter where you are in the world. This technology does afford us that opportunity and we need to see how to leverage it.
Meanwhile, the headsets are getting better – they’re smaller, with more power – and the connectivity is getting stronger. So, when we truly realize 5G, and 6G when it comes, all the processing power won’t have to happen in the headset, it can happen in the cloud, which means the headsets will get smaller again. And then it becomes something that is just as easy to wear as a pair of glasses.
Dave Wilson, Account Chief Technologist at US IT services and consultancy provider DXC Technology, argues:
One advantage of the Metaverse from a financial services perspective will be operational resilience. Virtual worlds could allow you to do complicated, rich 3D mapping of your business and technology estate, to understand business disruptions and focus on making sure you invest and comply with policies.
Before, it could be time-consuming to try to understand all the components within an organization, and the relationships and dependencies. I think a virtual world capability would support that better.
This is all very well, but logic suggests customers/users would be more likely to glimpse different Metaverses through location-based, augmented- and enhanced-reality experiences than immerse themselves in one for long periods of time.
And that’s not all. The rise of Roblox and other ‘dream it and you can build it’ worlds – arguably the Web was that from its inception – suggests that native applications, plus the ability to create entirely new spaces, seem likely to be the core benefit of Metaverses. Why just simulate the spaces we already have? Why not find new ways to engage, instead of remaking the old ones with pixels?
This reveals how problematic the term ‘Metaverse’ is. When something is ‘meta’ it tends to mean that something is self-referential and conventional. Yet perhaps in a Metaverse customers will want the exact opposite.
Perhaps they will dream of being someone new and unconventional – of adopting new identities in new realms, rather than being avatars of their real selves in some recreation of daily life. They might want to explore experiences that their finances, appearance, gender, self-image, social status, or perceived identity denies them.
For companies in a metaverse, this would raise a host of complex issues – about customer choice, ID, verification, privacy, and security. Might banks force meta-citizens to be who they really are, creating customer disengagement?
Or, using the Twitter experience as reference, Metaverse customers might interact with a real Hollywood celebrity one day, but on another, chat to a different kind of actor: a bot, hacker, fake account, or troll who plans to steal their data and assume their identity.
For banks and financial services companies, all of this needs deep consideration.
The long-haul journey into Metaverses has begun, as digital realms are overlaid on the physical one via our phones and tablets, and (if privacy challenges can be resolved) via our smart glasses and other interfaces.
But the future won’t arrive uninvited: it is always a negotiation that has real-world consequences. And, on the face of it, there may be a tension between what some customers want from a metaverse – freedom, anonymity, fun, and play – and what companies would need to provide, in the form of ID, authentication, safety, and security.
Put another way: before we enter Wonderland, we will fall down a lot of rabbit holes.