Merge session

The case for the metaverse: Why it will work

The idea of the metaverse is gaining traction. However, Zuckerberg’s hopes for instant success with announcements of avatars with legs may be falling short of the mark. 

The development of a Web3 may seem trivial, focused primarily on pushing VR. Recent updates covered by the media allude to a Second Life 2.0 type offering, which is highly funded but with dismal amounts of adoption. Despite this, the technology could significantly impact financial services and the world we know.  

Jehangir Byramji, Emerging Technology & Innovation Lead at Lloyds
Jehangir Byramji, Emerging Technology & Innovation Lead at Lloyds

At Fintech Nexus’ Merge 2022 event, a panel was centered on discussing why this time it will work. 

“It’s very nascent. So it doesn’t exist yet, which makes it hard to define,” said Jehangir Byramji, Emerging Technology & Innovation Lead at Lloyds. “If we try and start with a succinct definition, it’s going to be wrong.”

“Along with the intertwining of real and virtual worlds, it’s something about the fact you’re not just going to play games there… It needs to encompass a broad range of usual activities. I think that will feel quite different than it does today.”

This time it’s different

The metaverse could give the virtual answer to our digital lives, creating an online immersive space to conduct online processes with slightly more tangibility.  

“For me, this is all about frictional costs, taking frictional cost out of the economy,” said Haydn Jones, Director and Senior blockchain Market Specialist at PwC. “Whether it be commercial transactions, physical interactions, marketing, and advertising, all of that can be compressed to code, which is very cheap to connect.”

Haydn Jones, Director, and Senior blockchain Market Specialist at PwC
Haydn Jones, Director and Senior blockchain Market Specialist at PwC

“We can publish a smart contract. We can agree that that smart contract executes with a set of conditions and that you get paid, and I get services. That’s frictional costs. With blockchain technology, we get four for one. The problem with that is that we still have to deploy that over internet-type interfaces. The opportunity within the metaverse is to take out lots of frictional costs associated with things like commercial transactions.”

However, virtual online interfaces have been around for a while. Second Life and Habbo, while gaining much initial interest, have since dissolved into nothingness. While developments with virtual reality headsets have made the experience even more immersive, who’s to say the metaverse will be any different, especially for financial services?  

“Web3 was missing last time. That’s why the metaverse failed before,” said Pavel Matveev, CEO of Wirex. “We’re getting close to Web3, I think it’s still early days, but hopefully, it will change how we interact with the metaverse.” 

The fundamental component of Web3 may have shifted the technology behind the metaverse. Web3 and blockchain have proposed significant benefits for financial services, and the metaverse may be where these converge. 

“From my perspective, the metaverse is less about virtual reality and is more about data ownership,” he continued. “The context matters; it is about the next evolution of the Internet, Web3. Having data ownership plays a big role in Web3. So from my perspective, when end users own the data, I think adoption opens many use cases and a lot of possibilities in terms of exchanging value in P2P relationships and these sorts of things. But I agree with friction, and that metaverse simplifies it.”

Self-sovereign identity may drive scale.

Self-sovereign identity is one of the most critical elements of the Web3 evolution. Some believe that without it, innovation in the metaverse will be stunted.

“The metaverse can’t scale without self-sovereign identity,” said Jones. “We need a fundamentally different way of thinking about identity and store of value. By that, I mean both bitcoin and fiat and other things which we can attribute value to but also other credentials that are attached with me.” 

“At the moment, my credentials are spread out across different things. I have a safe at home; it has my academic certificates. I’ve got my banks, which sit on an app. I’ve got my health certifications, passport, and driver’s license, which are spread out all over the place. It’s a mix of physical stuff, and it’s electronic stuff.” 

“We need a one-stop-shop for the stuff that identifies me, is attributable to me and can be interfaced with digital things. So I can just turn up in a meta world, and it’s immediately apparent that I’m the person that I say I am.” 

“Banking at the moment does a bit of that, but I think with some imagination, the way payments can change is that they can become the vehicles for all of these different credentials. There is a new role for the banks in the future in terms of allowing the interoperability points to be addressed.”

He explained that for him, the evolution of banks had moved from custodians of physical things to software providers facilitating the movement of money through digital messages. With the development of neobanks and fintechs, the provision of financial services is now not constrained to banks. However, there could be an element that differs them from newer financial services providers

“The thing that is unique to banks is security. They stand for security. So if I have a series of data objects associated with me that can be digitized. I look to these secure brands with lots of history that can then leverage that security capability. So it allows me to have a seamless interaction in these environments.”

The metaverse could present an opportunity for another step in the development of the banking sector. 


second life metaverse
Second Life and the metaverse continue to be compared, however, the technology providing the infrastructure could be quite different due to developments in Web3

Financial institutions already responding

Despite the creation of the metaverse still underway, financial institutions are already responding. Although unsure of what the metaverse will become, steps are being made to meet possible demand. 

The panel explained that the metaverse economy is likely to use digital currencies. Unlikely to include coins such as bitcoin due to their tendency to be regarded as an investment rather than a payment vehicle, they predicted that it could be positioned better towards stablecoins. 

“The question is, does a central bank issue it? Or is it issued by a third-party private company?” said Byramji.

Regardless of where the tokens are eventually issued, the panel agreed it is an opportunity for financial services. 

Matveev explained that for him, two areas showed the most promise for the interaction of financial services with the metaverse; transferring value or payments and within decentralized social networks. 

Pavel Matveev, CEO of Wirex
Pavel Matveev, CEO of Wirex

“There are a lot of friction points for end users in the metaverse… So, we’re focusing on making access to the metaverse as easy as possible. This January, we launched a new product called the Wirex wallet,” he said. 

“It’s a noncustodial wallet, which doesn’t use phrases or private keys…It’s more secure and more user-friendly at the same time. This is one of the things we’re doing in the metaverse; we’re providing easy access for end users to be free.”

Jones said that PwC had also shown significant interest in the emerging metaverse. 

In the past year, the company bought land and assisted clients, which included a regulator, to do the same. However, their most significant step was to create a product that deals with VAT within the metaverse. This followed their report on the tax considerations of NFTs and aimed to develop a more straightforward calculation of VAT for NFT investors. 

Although these steps are seemingly small, all three panelists agreed this was only the beginning. As the metaverse and Web3 continue to develop, intertwining the two could paint a positive future for users and finance. 

“Having the mobile phone has made a big difference to many (whether the metaverse will work this time). And Web3 will make a big difference,” said Byramji. “We can already start to envisage, with a bit of hope and fingers crossed, a more decentralized future, which allows individuals to be more sovereign over their data.” 


  • Isabelle Castro Margaroli

    Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.

    Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.