Yes, it’s just a ‘concept’ at this stage.
Weekly Leading Article
Unless you’ve been living under a rock these past few days, you’ll be aware that Mark Zuckerberg has decided to rename Facebook (the company) to Meta.
You may also be aware that Zuckerberg painted a new direction for the future of the social network company—even as Facebook battles a storm of criticism and negative publicity—to enable what he’s calling the ‘metaverse’.
The metaverse isn’t a new concept; the term has been around since the 1990s. Meta’s CEO succinctly described it last week as “an experienced internet”.
Enabled by technologies like virtual and augmented reality, Zuckerberg’s pitch is that the metaverse will be a “successor to the mobile internet” that brings “presence” to our online interactions and that Meta itself will be spending $10bn next year to start building it.
Now, whether or not you agree with Zuck’s vision of the future, for fintech the metaverse presents a host of tantalising new questions.
How do we transact in the metaverse? Is there a virtual ‘checkout’? If so, who powers it? Facebook, Stripe or Visa? And are we paying in Dollars, or Dogecoin? Do I pay now or buy now, pay later?
What impact will this have on the investment in virtual goods/NFTs? Will their value increase in the metaverse, as they become fully realised? Or decrease as digital duplication removes barriers to access? Which virtual goods will store value, which will grow in value, and which will depreciate?
Will financial advice have a place in the metaverse? Where do I go for investment advice, or to monitor my portfolio? How do I manage my mortgage? Does my bank need a meta-branch, or a metaverse app on my avatar’s virtual smartphone?
Looking at these purely hypothetical questions in 2021, it’s also easy to have a sense of déjà vu.
As pointed out by Benedict Evans on Another Podcast last week, the discussion around the metaverse today is incredibly similar to the excitement nearly 20 years ago around Second Life.
Brands like Adidas, Calvin Klein, IBM, Herman Miller and Mercedes wasted millions building stores and even whole islands in Second Life… only to discover that their only visitors were mainly marketers from other brands.
Now, Zuckerberg and his supporters will point out that the metaverse is vastly different in several respects.
Technology has significantly improved—especially VR and AR—bringing us far closer to a fully-realised vision of “an experienced internet”. Secondly, the startup funding environment has matured and grown significantly in the last 20 years, plus Zuckerberg’s $10bn pledge will embolden investors willing to back metaverse companies.
Yet, unlike Second Life, for now the metaverse remains largely conceptual. An unproven and unrealised vision of what could be, with a vague time horizon of 5-10 years.
No doubt in those years ahead billions will be spent preparing for the metaverse, teams across the fintech ecosystem are already feverishly trying to work out what the metaverse means for them and how they can play in it.
Ultimately, that’s exactly what Zuckerberg and his embattled Meta organisation wants.
The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism: firstname.lastname@example.org