Described by industry experts as the next evolution of the internet – a 3D model of the internet, the metaverse has been defined as a convergence of physical, virtual, and augmented shared space where individuals or users can buy and sell virtual items, land/real estate, and other assets using digital currencies. In recent times, the metaverse has been rapidly gaining traction in the banking and financial sector. Furthermore, banks are turning to virtual reality due to its potential to change the way customers bank and interact with the money.
The future extent of the impact of the metaverse on the sector depends on the evolution of the underlying technology, especially utilising Web3 and the degree to which platforms are adopted as part of our daily interactions. Some of the examples include financial services companies utilising the technology for employee training. Conceptually, metaverse seeks to be an interoperable, digital world where people are conversing, earning, and spending and importantly, merging real and virtual assets. It is such a game changing concept that its mere existence requires new thinking on several fronts such as securing our identity, conducting transactions, and owning assets.
As a matter of fact, over the previous decade, especially in the backdrop of the global health crisis, other areas of financial services such as payments, custody and compliance, institutional and retail investing, real estate, and insurance among many others, have benefitted from innovative fintech solutions. The UAE has always been at the forefront of technological advancements. In this regard, the recently launched Dubai Metaverse Strategy aims to turn Dubai into one of the world’s top 10 metaverse economies as well as a global hub for the metaverse community. The strategy aims to build on Dubai’s achievement of attracting more than 1,000 companies in the fields of blockchain and metaverse. It also promotes Dubai’s ambitions to support more than 40,000 virtual jobs by 2030. This would further boost Dubai’s economy and support the UAE government’s vision of increasing the number of blockchain companies by five times more than the present number. Dubai plans to become a key player in the virtual world and is developing a regulatory and legislative framework for the sector. It is also launching projects and initiatives that will further raise its stature in the virtual world. The committee is currently working on identifying opportunities and challenges and continuing the development of the legislative framework that covers future requirements of all sectors. In addition, the committee is working on qualifying human capital to be able to excel in the virtual world. Current estimates expect business revenues from the metaverse could grow from $180 billion to $400 billion by 2025. One recent example of the direction taken in the UAE is of a leading financial institution in the MENAT (Middle East, North Africa and Turkey) region, which has launched a global accelerator programme for metaverse start-ups to enhance customer experience for the new virtual economy, in partnership with the Dubai International Financial Centre (DIFC) Fintech Hive, the largest financial technology hub in the Middle East, Africa and South Asia (MEASA) region, and powered by technology provider Microsoft. In line with the Dubai Metaverse Strategy, the accelerator programme aims to position the bank as a leader in the next phase of banking innovations. The underlying rationale is that with 94 per cent of all financial transactions and requests conducted outside the branches, financial institutions need to explore new technologies in the web 3.0 world to expand their digital footprint and create immersive experiences for customers.
Through the programme, it is hoped to further scout for leading fintechs, digital experience start-ups and emerging technology players operating across the metaverse landscape and to enhance its immersion in the virtual world across three key areas: building the technology stack to facilitate the shift to 3D, creating virtual worlds to augment the customer experience in the metaverse and enabling a decentralised payment infrastructure for customers to create, monetise, buy and sell digital assets and services. While this is a start, the road ahead is long with many twists and turns. What cannot be denied is that the metaverse has finally arrived in the fintech space within the UAE and the journey has truly started.
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