by Dr. Ebenezer Onyeag
When Neal Stephenson first posited the idea of humans interacting in three-dimensional virtual space in his 1992 science fiction novel Snow Crash, many thought it was unrealistic and futuristic. Such skepticism stemmed from technological limitations at a time when the tools to create fully immersive digital worlds were still in their infancy. However, with rapid technological advances in recent years, the proliferation of the Internet has led to breakthrough advances in blockchain, cloud computing, artificial intelligence (AI), and virtual/augmented reality (VR/AR). and the growth of digital social platforms – the dream of a complete metaverse is coming true.
The Metaverse is currently in its early stages. Its definition remains somewhat elusive and there is no universal agreement. But at its core, it is a vast virtual space made possible by the combination of the aforementioned technologies. It represents the fusion of our physical and digital realities, creating his unique and immersive 3D setting for human connection. While there may be debate over its precise definition, there is a growing consensus on its potential to revolutionize human interaction. In fact, once fully realized, the Metaverse will change the way humans interact with each other and conduct activities such as work, socialize, play, and shop within digital spaces. This transformative impact is expected to create a wide range of economic opportunities across a variety of sectors.
A June 2022 report from McKinsey Global Institute (MGI) suggests that value creation in the metaverse could reach $5 trillion by 2030. Specifically, MGI estimates an economic impact of up to $2.6 trillion for e-commerce and approximately $270 billion for academic virtual networks. The impact on the learning market is approximately $206 billion, and the impact on gaming markets and other markets is approximately $125 billion. It’s also worth noting that major companies like Meta, Roblox, and Microsoft reportedly invested around $177 billion in Metaverse development from 2021 to mid-2022. As businesses and consumers turn to the Metaverse, we see the dawn of a new virtual economy. Similar to our traditional economy, this emerging digital economy includes virtual goods, digital assets, and experiences, from virtual real estate, digital art, in-game items, virtual fashion, virtual events, and even virtual jobs. , and transactions of services. According to Gartner’s 2022 study, approximately 30% of global brands plan to offer Metaverse-enabled products and services by 2026.
There is no doubt that the rise of the metaverse economy is having a significant impact, especially on the financial services sector. One of the major changes will be in the area of payment systems, causing a further shift from traditional to digital payments. In other words, the metaverse economy has the potential to further popularize and normalize virtual currencies such as cryptocurrencies, central bank digital currencies (CBDCs), and non-fungible tokens (NFTs). Payment service providers will focus on developing the digital payments value chain, i.e. virtual currencies. , cross-border payment platforms, virtual wallets, and necessary technologies such as blockchain and decentralized finance (DeFi).
As the metaverse standardizes the digital payments landscape, investment and focus will naturally gravitate towards enhancing cybersecurity and privacy. These virtual transactions require strong security measures to prevent fraud, hacking, unauthorized access to virtual assets, and phishing targeting users and infrastructure. As cybersecurity efforts prove effective in ensuring the safety of these virtual platforms, more users are likely to adopt digital payments, thereby increasing the number of digital payment methods. It will be disseminated and maintained.
In conclusion, the transformative potential of the metaverse suggests that companies should be forward-thinking and strategically positioned to benefit from technological change. Financial services companies in particular continue to have a vital role to play in meeting the unique payment demands of this new virtual economy. Now that the horizon of the Metaverse economy is in sight, the future of payment systems is definitely digital.
Dr. Ebenezer Onyeagwu is the Group Managing Director and CEO of Zenith Bank Plc and the Chairman of the Banking CEO Association of Nigeria.
This opinion first appeared in Zenith Economic Quarterly Vol. 2. 19 No. 3 July 2023 column “CEO Insight”.