Mia

Let's start with what a day might be like in the life of a middle-class consumer in 2030. Mia wakes up at 7 AM to the soft sound of classical music playing from the speakers in her bedroom. The shower is on, the coffee is brewing, and a holographic display shows her the balance in her bank and investment accounts, and notes price movement in a cryptocurrency she holds. She also receives health data upon awakening. Her heart rate is steady, but she is a bit dehydrated.

While she slept, her smart home system paid for the next two months’ anticipated power in advance because the price is predicted to rise soon. Over the course of the day, her cloud-based wallet, boosted by machine learning and trained by Mia's preferences and risk tolerance, performs several transactions to optimize her finances, putting her in a more advantageous tax position, and earning her a few dollars here and there.

As she eats breakfast, her bills to be paid are reviewed, and her budgeting app informs her she has saved enough for next month's vacation. She asks Alexa to book the tickets on a travel site and purchases insurance for the trip at the same time. She also asks her to book an Airbnb and purchase a prepaid entertainment pack for the city she's visiting. All of this information appears instantly in her virtual wallet and is shared with the person she is traveling with.

She has never been to a bank. She has several financial services accounts, and while she is not clear on what they are, she knows how much she pays in fees each month. But as to how the financial infrastructure behind her wallet works, she has no more need to know than she knows how her car engine works, or how the refrigerator stays cold.

When it's time for work, Mia puts on her headset and steps into the virtual office. Work takes about four hours, then she says goodbye and checks out.

Later in the day Mia gets in the car to do some shopping. Her car brings up menus from restaurants along the route in case she wants lunch. She pays for an order through the car, which is connected to her wallet. The food will be ordered just in time so that it is delivered to her when she makes it back home. When she travels along a toll road, the car pays. Because it is a high-congestion time of day, the city charges a small fee, which the car alerts Mia to, then pays, since it is not optional.

At her favorite store, Mia is identified through her facial biometric data when she enters. The store communicates with Mia's wish list, and offers items on the list that are high priority to her. One of those is a new chair that Mia has been considering. The store can offer advantageous financing on the item, but Mia is saving for something else, so her AI system turns down the offer, but will notify Mia later so she can consider it at her leisure. Meanwhile, she tries on several items of clothing then leaves with two of them. The store knows which items she chose, and debits the funds from her account as Mia walks out of the store.

When she returns home, Mia looks over her vacation plans again. She may need a new surfboard. She picks one out but the price is a bit high, considering she has spent so much on her ticket. The store offers an interest-free payment plan, and Mia gets the surfboard without having to pay anything up front. The file appears in her 3D printer and within minutes the surfboard is ready.

Over the course of the day Mia withdrew funds from her bank account multiple times, performed several currency exchanges, and invested in new assets, but she didn't have to “do” any of it. It all happened, along the lines she had previously laid out.

Mike

The next day, Mike, a rideshare driver, starts his shift. Mike also operates with a cloud-based wallet, but being in more straitened circumstances than Mia, he operates quite differently. He carries some debt, and his primary financial concern is paying it down and refinancing it.

Mike's bank account is through his rideshare platform, and he is paid instantly for his rides. He uses the income from his last ride to fill up his tank, never having to leave his car or take out his wallet. Like Mia, Mike's wallet moves funds around when it is advantageous, but unlike Mia, Mike's risk tolerance is very low because he doesn't have a lot of spare funds at his disposal.

During the course of the day, between rides, Mike gets a flat tire and pulls over. He doesn't have the funds right now to pay for a tire, but it's not an optional purchase. Without it, he can't do his job. He has several options. His employer will finance the purchase for him, or he can use financing from the auto parts store he frequents. Mike enters the tire he needs and his wallet informs him the store deal is better than his employer's, so Mike contacts them and an hour later an employee is on the scene and putting on the new tire. Mike can't afford to pay for the tire in four weekly installments, so the financing company sets up a custom arrangement for him. For only slightly more interest, Mike can pay the loan back over the course of three months. The loan is offered based on Mike's driving history and predicted income and Mike has the option to have a small amount deducted from each ride or to pay in weekly lump sums. He chooses a per ride deduction plan over three months. He doesn't want to carry the loan that far, but this arrangement allows him to continue the rest of his financial plans with minimal interference, and his flexible work arrangement gives him the option of driving for an hour more here and there to pay the loan off more quickly.

Later in the day, Mike receives an alert: his heartbeat showed a slight irregularity earlier. It may be nothing, but it should be checked out. Because his health insurance data is embedded in his wallet, the wallet can make an appointment with his doctor for next week, and order a refill of his medication. Mike opts to have it delivered by drone this evening rather than driving out of his way to pick it up today, while the drone option incurs a small fee, his virtual wallet informs him that the potential income he would lose by driving to pick up the medication is greater than the drone fee. That night when Mike gets ready for bed, his smart mattress suggests he aims to get to sleep 30 min earlier as the data from his watch shows that he sleeps better and is more productive with a slightly earlier bedtime.

Data

The environment will be highly interactive, with far more points of contact and data exchange than today. Walking down the street, intelligent systems will interact with your digital aura, the way your AI-powered wallet interacts with the environment. It will be preloaded with interests in order to streamline the kind of marketing that you will engage with, and reject incoming signals the user has not approved. Today we have catalogs of cookies on our web browsers, but we are not fully in control of them, and are being tracked by sites that we visited once and would rather not be associated with. Remember when you ordered a Thomas the Tank Engine toy and book set for your boss’ son that one time only but have been targeted with multiple Thomas the Tank Engine ads across your digital life since? This will no longer be the case in 2030.

There will be far greater awareness of the importance of maintaining the integrity of our data. What we do, including what we now call our digital footprint, forms a rich picture of our lives and interests, and though many companies together comprise this picture, in totality, it belongs to us, just as a chef uses many ingredients to create something new and unique. The individual pieces are vital, but they are only fractions of a whole. In 2030, there will be a greater understanding of this, and just as we today maintain rights about our person and our property, the same protections will extend to the data we generate. Data has value, and companies that want to use our data to make money will need our permission, and in some cases, will need to pay us. Our data has the ability to be passive income streams for us depending on how and where we feel comfortable sharing it.

Data plays a crucial role in optimization as well. How do we enable money to work for us as it did for Mia and Mike? Not in the way that many of the wealth management platforms are focusing on but on everyday purchases and interactions? It all starts with making optimization easier and more intuitive. This is already happening where people are using a certain card on their groceries that gets them 5% cash back at grocery stores and then perhaps their airline card for when they book their travel and hotel that gives them triple the points. Can you imagine a world where this is all automated and optimized so that you don't even have to think about which card you use but rather your virtual wallet automatically uses the right card for the right transaction in the right place?

As Sanjib Kalita, founder of Guppy and editor-in-chief of Money20/20, says: “Easy optimization is key. With embedded finance and also in parallel, thinking about consumer data vaults and AML [anti-money laundering] to optimize some of that data, embedded finance could change things as far as how many options consumers can juggle at a time, or consumers don't have to juggle at all.” This optimization can span beyond everyday payments into any interaction with our financial lives. Should we be refinancing our home mortgage more? How often? Is it worth the time, effort, and savings? As Matt Harris, partner at Bain Capital, says:

We're earning less interest than we should. We have balances everywhere that are lazy and sloppy as we don't have time for the optimization equation. But software has time for it. And so as our lives become more driven by software than the negative net interest margin that we all experience-paying too much for credit, earning too little on float, etc. We're all paying too much for financial services through our passivity and having software to handle that for us is going to be amazing.

Insurance

Insurance is already undergoing transformation with digitization, but has been more resistant to change than banking. Younger and less affluent customers only purchase insurance when it is required, and insurance products often do not seem to be necessities. In other words, many people are willing to carry the risk of being uninsured unless they are required to be insured. In 2030, insurance will be available in targeted microdoses, in context, around experiences customers want. Insurance will be situation-specific, often of quite limited terms, and underwritten entirely by AI. Companies such as Hippo and Lemonade already offer sophisticated home insurance products that can be underwritten and sold in minutes with a few taps of the screen.

Health

Health insurance is an area that is a prime opportunity to continue to build out IoT to offer insurance products. Companies like Fitbit, Apple Watch, Garmin, and others are already gathering enormous amounts of health data and understand to a highly specific degree the behaviors of the people who are wearing the devices. It is only natural that then they could offer insurance products on top of this. We still have a way to go with this from a global perspective. In areas like Europe, health data is very sensitive and the regulations don't allow companies to price products depending on health risk or end user behavior. In the future, you can imagine that companies will be able to use this data to either prevent damages so that people have a better lifestyle or to gather data in case there is a disease, health crisis moment like a heart attack, or multiple comorbidities that may be present with certain individuals. This concept is already making its way into pop culture as the Showtime series, Billions, highlights in an episode relating to a heart attack. One of the key figures is on an exercise bike during his routine workout only to find the paramedics at his door. They have come to find out his condition, as the smart health ring on his finger noticed abnormalities and was able to prompt medical intervention, saving the character from a life-threatening heart attack.

Marketing and Advertising

Every brand in 2030 will seek to build strong relationships through direct digital contact with their loyal customers. Relationships with brands could grow intensely personal, if we allow it. People may voluntarily interact with a brand for hours at a time on a regular basis and place deep trust and affection in that brand.

Studies by the British anthropologist Robin Dunbar show that the average person can maintain 150 or so casual friendships, up to 15 close friends, and five intimate relationships. Perhaps humans can maintain five “intimate” brand relationships as well. Marketers should consider how their brand can be one of those, for thousands or even millions of people.

Through tracking of digital touch points, brands will be able to determine if they're “intimate” with a customer, close to them, or just casual friends, and adjust offerings accordingly. This will make a difference when brands are the ones offering financial products. Intimate customers will be treated differently. In the age of embedded finance, relationships matter more than ever and embedded finance will enable brands to build those relationships by wooing the customer through seamless financial and lifestyle experiences, always delivered at the point of context.

The opportunities created by embedded finance aren't true only for end consumers but also for merchants, especially around marketing and advertising. As Livia Benisty, head of Business AML at Banking Circle, predicts:

Embedded finance will be integral in every B2B2C proposition. I am personally excited about how finance can increasingly be embedded into the user journey for specific large purchases instead of being a standalone product. For example, I expect that in 2030, merchants will be able to obtain financing when they buy online advertising from companies like Facebook and Google and only repay when their online advertising translates into real sales—compared to today where they have to take a loan separately, buy online advertising and repay, independent of whether their online advertising worked.

Sustainability and Inequality

Consumption will become more local. Unnecessary travel of our persons or products will be considered excessive. 3D printing as a means of creating consumer goods will assume vastly greater importance as far fewer manufactured goods travel on container ships from China to the world's ports. Items made of common materials will be 3D-printed on demand very close to their desired location (if not within the home itself!). Today there are already 3D printing machines that can build homes in 24 hours. They will soon routinely build every conceivable consumer product, from cars to food to custom cabinetry to artificial limbs. Today Amazon prints books on demand, while in 2030 Amazon will print just about everything on demand. You will pay for consumption not only for the products we consume, but also for their disposal. California is already imposing fees for trash collection. This will increase greatly, particularly in progressive jurisdictions. Individual responsibility for the creation of landfill or pollutants will be tracked and assigned in the hopes of reducing harm.

William Gibson's famous maxim is: “The future has already arrived. It's just not evenly distributed yet.” It is worth remembering half of Gibson's maxim: The future arrives unevenly. In 2030, though the number of people living in poverty will be lower, the gap between rich and poor will still exist, and may be wider than ever before. Since at least 1895, when H. G. Wells's The Time Machine was published, a consistent vision of the future is that the rich have gotten still richer. One expectation of embedded finance is that it will bring more people into the financial system and provide them with the opportunity for financial success. The mass personalization allowed by digital banking, as well as the democratizing effect of digital tools, which are quite similar, no matter what your income, serves to have a flattening effect on the differing experiences of both the affluent and the struggling.

The Convergence of Online and Offline

The connection between online and offline is currently a fairly disjointed experience. When you walk into a shop to purchase a bag, they likely don't know who you are but if you visit that same shop online, they likely recognize you through cookies or site login being stored with automatic sign-in for repeat visits. If the online shop then has the ability to embed rewards and other incentives to encourage you to let them track you, the online shop can offer you a better experience while you are in their offline shop. There is a tremendous benefit for the retailer, the brand, and you, the consumer, because you get appropriate things that are directly relevant to you when you want them most providing real value.

A big part of our lives will continue to be offline and more and more in the future the two worlds will collide. Javier Soler, BBVA's head of Global Sustainability, believes that “more and more, the online and physical world become one and the same.” You may use your app to call a car to pick you up and you may order your food ahead of time from your phone, but you are still physically going to the restaurant to consume your meal with a friend and discuss life. As far as banking goes, Javier states: “Our belief at BBVA is that those banks who develop the most in the online world, but at the same time have a relevant physical presence, are the future winners.” While Javier sees that there is a trend in the shift to the online world, those that crack the code at mastering both will be the long-term winners.

Eduardo Vergara, managing director and global head of Transaction Banking Product and Sales at Goldman Sachs, believes that the distinction between online and offline will be increasingly blurred, with embedded finance driving this change. In particular, he mentions the Internet of Things:

I think what you're going to see is financial services being embedded into those offline experiences. Whether it's your car or your refrigerator, you'll see financial services embedded very soon. You're going to see cars paying for gas when you pull up to your gas station, or your refrigerator ordering and paying for groceries that you're running low on.

Zach Pettet, host of the podcast, “For Fintech's Sake” and content director for Money20/20, believes in the ongoing connection of the two worlds as well. Zach states:

My hope is that the digital world is informing the physical world in a way that is improving human lives, specifically meaning health, happiness, and wealth. Likely this will change our work lives so that people that want to be creators for a living, can be creators for a living and really do it in a way where they're supported with the infrastructure necessary to do that where they can think about everything necessary to do that, from soup to nuts, starting with taxes and moving from there.

There are many things to think about when imagining how the online and offline world intersect, and one key area to look at involves fraud. Today, the offline world is typically known as the safer world when it comes to fraud, especially within financial services. It is still common for people to go into a branch and open their bank account with their ID and get access to their funds and services much more quickly because they were there, in person. While you have the ability to open up an account online, many customers still feel that the level of fraud is higher, hence the plethora of companies flocking to the space focusing on identity, security, and fraud. But what if, in 10 years from now, those two worlds were flipped? As Sanjib Kalita says: “Imagine a world where people trust you more online than offline. What are the implications of that?”

The Wallet of the Future

Transactions in this future world will be frictionless and invisible, yet the pricing will be transparent. Our digital wallets will do our transacting for us, autonomously and with our permission. The busy consumer will be spared many tedious transactions, and the underserved consumer will see opportunities open up where none existed before.

Rather than carrying cash or even cards in a physical wallet, value will be stored in a digital wallet that will be our primary account. This “wallet” is actually a sophisticated piece of software that manages multiple payment accounts, loyalty programs, and perhaps manages our investments and our identities. The value held in our wallets can be traditional funds, cryptocurrency, store credit, gaming tokens, and much more. All of this value will be accessible and fungible within the wallet as users perform transactions.

In 2030, small routine transactions will be autonomous, machine-to-machine. Purchases will not require interacting with a cashier or even a website or app shopping cart. The purchase will be logged, invisibly but transparently, and your wallet will pay the merchant. This will also be the case for non-discretionary payments, such as bills. If it needs to be paid, artificial intelligence (AI) will know and do it. When approval is needed, the user will be notified. When it comes to major purchases, offers and discounts will arrive automatically, but approval will still be manual. Nonessential purchases (the fun stuff) will also largely be manual, but the potential for automation within defined parameters will be high and ubiquitous. AI will review competitive offerings and make sure your choice is the optimal one for that time and place.

What form will this AI agent take, and “where” will your wallet reside? It will not be in the personal device you carry in your bag or pocket everywhere you go. Or rather, it will not only be in your personal device—it will be in every device you possess, in a cloud or aura that surrounds you, or stored in many places, a capability offered by Web3, which is a new iteration of the World Wide Web that incorporates decentralization based on blockchains, that is gaining strong traction.¹, ² And there will be far more connected devices in 2030. Your home, your vehicle, even the places you visit outside the home. Your digital aura will interact with the digital presences of brands, institutions, other people, and data will be exchanged. It is analogous to the self-driving cars that will be the standard in 2030. Most interactions will be dealt with autonomously, and only occasionally will you be required to intervene in your own financial life. But these autonomous transactions will be context-rich and if you wish to look into them, there will be a great deal of detail to investigate.

Consumers in 2030 will use more financial products in a day than many of us do in a month in 2022. This is because financial products have been sliced into context-specific bites and are delivered via trusted brands at the time of need. An ecosystem of fintech companies surrounds the base financial accounts and makes them accessible to top-level, consumer-facing brands.

The typical wallet of 2030 will see money in constant flux, shifting between different currencies. The same way portfolio managers operate today, our wallets will operate in 2030. If we have too much money sitting in cash that is depreciating in value, our wallet can shift the funds over to a cryptocurrency or other asset that is more resistant to inflation. Micro investments in cryptocurrency and trading with fractional shares will happen automatically, along user-defined parameters and risk tolerances, without the user having to even think about it. The trading will not just be in traditional stocks and funds, but in shares of scarce commodities such as sneakers, classic cars, baseball cards, and of NFTs, or non-fungible tokens, which are unique and non-interchangeable units of data stored on a blockchain, a form of digital ledger. NFTs can be associated with reproducible digital files, such as photos, videos, and audio—and grant the holder the unique and undisputed ownership of the associated digital file.³

Beyond the view of how the wallet of 2030 operates, we could have a multitude of wallets, depending on the context we use them for. Brett King has been predicting the type of wallet we foresee in 2030 since 2010. King believes in a multitude of wallets that will not necessarily be neutral or interchangeable. We will have wallets from different companies, with different strengths, biases, and priorities. Some wallets might focus on investing, others on saving. Dave Birch, author and commentator on digital financial services, points out that some wallets could be shopping-centric, from the likes of Shopify, while others would be more investing-focused or financial-focused, from PayPal, or a bank. These wallets will come to be our new primary financial institution. If we're crypto-focused, it could be Coinbase. So while banks might fade into the background in many cases of embedded finance, in the future when our wallets are more important, banks will have more competition, but they can still claim significant mindshare by providing convenience and the right services.

The Interplay of AI and Human Decisions

Dave Birch has some thoughts on how the AI or wallet systems described above might function in practice, and that, in some ways, the future is already here. “There's some legislation in the U.K. whereby gambling companies have to check that you are safe to gamble,” Birch said, noting that this would apply also to payday lenders and others who would also need to guarantee that you had the funds or means to pay back the loan.

One obvious way to do this is by using open banking data to access your account and check that you haven't spent too much on gambling. Obviously this happens with your consent. Things like that are really a very interesting shift. So you're trying to help the consumers and support them and take care of them, but in order to do that, you have to have a picture of what they're doing. And then you can use AI and machine learning and so on to help them make good decisions. And it's kind of a weird thing to say, but the average person, and I include myself in this, doesn't necessarily make good decisions around finances. You don't have to be dictatorial. Just the right nudging at the right time can help people to make the right decisions.

Birch is optimistic that embedded finance can be beneficial to consumers, but as with identity proving intrusive, AI too poses challenges. And when a financial services company's AI is talking to your AI-powered wallet, well, the consumer may not be part of the conversation.

I hope what embedded finance means is that you have much more informed consumers of financial services and much more sophisticated providers of financial services. You have to have the right kind of consumer protection around this, but hopefully with AI, that should be easier as well. One implication of that is that the financial products themselves will probably get a lot more complex because when you have AIs talking to AIs, if you're trying to sell me a pension, I don't understand anything about pensions. It's impossible for me to make the right choice the way legislation works at the moment. It's almost perverse that I'm even in that loop. It's like, why are you even asking me? There are rules that say you have to ask me for consent. Why? I don't know the first thing about it. I want the most super-intelligent giant pension killer robot on my side. And that means that the bank is no longer selling things to me. It's selling things to my AI.

This has profound implications for the future of marketing, according to Birch.

That's a real change in financial services, because what's the point of sponsoring the Super Bowl? My AI doesn't care about the Super Bowl. What's the point of you telling me you've got this 300-year-old brand? My AI doesn't care about your 300-year-old brand. All it cares about are the numbers, what are the returns and so on. So there are implications that go way beyond just the fact that if we get access to more people's data, if it's embedded in more services, we can nudge people to help them to make the right decision. Yes, we can. But it has implications that go beyond that because the sophistication of the products will grow as well.

And while it is simple to say that our AI-powered wallets will help us make more responsible decisions, there is a lot of nuance here. For example, sometimes we want to splurge, even if it isn't the financially optimal thing to do. We have emotional connections to products or brands and there are societal impacts on what is “cool” or “in style” that AI can't comprehend. How much control do we want to cede to systems that, while vastly more sophisticated than humans could ever be, may not understand the importance of relaxing or taking a moment for mental health?

Birch describes the idea of indulging in an expensive takeout meal. “Ordering a $60 pizza instead of a $30 pizza on a Friday night is probably not going to make that much difference to your overall financial health,” he says.

But making a really poor choice on your 401K does make a big difference to your life and your health. And that's where I feel I would need support. You think of the myriad little choices that are made through the day. Some of those are long term, some of those are short term. I can't figure all of that out. I do stupid things all the time with money. But does that mean, with an AI by my side, I would never get a $60 pizza? I don't think so. I like to think my giant killer pension robot would be a bit more tolerant.

The Future of the Web

Web3 is getting colossal attention at the moment. The reason for this is that it offers an open, trustless, and permissionless network, which, unlike the previous iterations of the Web, no single entity controls, yet everyone can trust, as every user follows the same set of rules, known as the consensus protocols. Web3 offers clear solutions to the shortcomings of the Web 2 internet. With Web3, the power shifts to the user.

“With embedded finance, consumer attention is a limiting factor but with Web3, that edge point is going to be the deciding factor. So you have the limiting factor and the deciding factor lining up to be at the edge of a decentralized small data point as opposed to a centralized large entity,” says Sanjib Kalita. This means that whether you have the patience and attention to focus on the details, you will be able to have the right products at the right price point that ultimately benefit you without having to get into the nitty gritty. Kalita continues: “Whatever technology is able to organize all those endpoints is going to be even more powerful.”

The momentum from the industry is all leading to one place—identity, the sovereignty of, the ownership of, and the monetization of, identity. A good execution of Web3, or what Web3 will inevitably be is that, solving for digital identity in the digital future. What does this look like in practice? Zach Pettet says:

It is the changing of the rails and the underlying technology to enable people to have the control and liquidity of their own identity. Web3 is just going to be another layer inside of embedded finance that will allow you to transact faster, that will allow you to lend your identity or to lend social clout to something in a provable way.

The idea of lending your social clout by sharing things like your social media presence to enhance your experience by either building further validation, reducing cost, or simplifying the process is not a new concept, as we have seen its uses in early days though alternative credit scoring but one that has a long way to go.

As we have seen previously, some established crypto platforms are moving into offering one-stop-shop embedded financial services to their retail users, including loans, saving offerings, and crypto-backed cards. But in the future, what does the life of a crypto user look like in 2030? Jean-Baptiste Graftieaux, CEO Europe of Bitstamp, supports the vision that crypto users will have a one-single view of all their assets and liabilities, potentially up to their art and music NFT collection, in a similar way we have seen PayPal evolve their initial proposition to give you the ability to pay, take a loan, and hold your assets. He also believes that crypto exchanges, which are relying on embedded finance providers for their fiat needs and who are already offering embedded finance services to their users, will play the bridge between crypto, NFTs, and the Metaverse.

Adam Bialy, founder and CEO of Fiat Republic, explains that embedded finance represents the intersection of the crypto industry and traditional financial ecosystems. He believes that embedded finance acts as a protocol between them, enabling traditional finance to unlock the growth of Web3, and that is going to remain the case for at least the next 10 years.

When it comes to crypto democratization, Matt Henderson, EMEA business lead at Stripe, believes that real-world crypto use cases are coming: “We see applications such as the possibility to use stablecoins to move money from one part of the world to another. I think those use cases will be important in our future.”

Fintech has evolved over time and the next evolution is one that will take decades to come to full fruition. As Matt Harris, partner at Bain Capital Ventures, says: “The next chapter is from centralization to decentralization (DeFi). The protocols that exist in DeFi create really interesting economic opportunities, they are largely unregulated and the Wild West from a user experience perspective and from a risk of loss perspective.” Because of this we are likely far off for consistent use by everyone across banking and insurance. But this change is coming and Matt believes: “The first breakthrough application will be stablecoins where you have a representation that is, generally speaking, collateralized, so the risk is quite manageable. Once you've abstracted dollars away from dollars or euros or pounds sterling, you actually get real friction removal benefits from that.” This is step one and “once you move people one abstraction layer away from actual fiat currency, then it's not that hard a thing to move the lending and borrowing and savings and yield and investments and ultimately, insurance. But this is going to take years.”

The Metaverse in Practice

Let's first explore Facebook, now known as Meta, a potential version. It could be expected that in Facebook's Metaverse, they will create it in a way that is similar to how they have behaved with their other assets to this point. They will likely want to control the hardware, the user experience, the data around the experience, and as such will likely control the economy as well. Will Facebook's Metaverse succeed? Time will tell but they certainly have the scale and network of bringing people together, so they have a good chance.

Who else might win in this future Metaverse and what could it look like? Matt Harris from Bain Capital Ventures says: “Apple probably has a legitimate shot at it. Google would be next on that list, and it falls off dramatically. Maybe Microsoft after that.” Outside of these companies, there is a large opportunity for a decentralized virtual world. Matt says: “You will have all sorts of real-world economic players who need to have things like branches in the Metaverse and offer their services as it relates to payments and then over time, real substantial financial services.” The companies who are already winning when it comes to providing payment opportunities within virtual gaming could certainly be key players in solving the complex payment challenges within the Metaverse as well.

Chris Skinner, author, commentator, and founder of The Finanser blog, believes that Metaverse banks and coins will have a key role to play to enable transactions in the Metaverse:

If you're living a second life, which is what the Metaverse will be, you are going to need to have the same things that you have in your real life. And it's interesting because when Second Life came around in the 2000s, people were making thousands of dollars out of virtual property. The Metaverse is a second virtual life and in the virtual life, you'll need a virtual bank to store virtual money.

The Second Life virtual world Skinner refers to is mostly notable in financial circles today for Linden Dollars, its proprietary closed-loop currency, and the wider Linden economy, which included interest payments and taxation. By 2009, when bitcoin was born, the Linden economy made up 25% of all virtual value online.

Railsbank founder and CEO Nigel Verdon is another believer in an embedded future in the world of the Metaverse, specifically around the digital asset management side of the house, powered by blockchains where you have provenance of the digital asset. “One of the major things in the digital world will be around provenance tracking, whether that be a sword, a skin on a car, a piece of virtual real estate,” he says. Razorpay is one example of a company already looking at doing this and many others are exploring as well. There are infinite possibilities, such as ownership of digital earth, or micro ownership of a valuable piece of artwork that you own in the Metaverse with the real piece of work still hanging in a museum in France. Nigel sees this as an opportunity to democratize ownership of art in a way that many have dreamed of but haven't had the right execution to this point. He leans toward the Jack Dorsey thinking on the topic saying: "The internet becomes the way that assets transfer into each other in a sort of distributed way and it's not until we have a common protocol on the internet or the Metaverse, like we had with email address and SMTP, that it will really take off.”

Matt Henderson explains that when it comes to the Metaverse, Stripe might become an infrastructure provider to companies that are building tools that are operating in Metaverse-like environments. “You may have some use cases whereby a gamer may want to get some microloan to buy assets in the game. We will stop using the Metaverse term so distinctly between the internet and the metaverse, and it'll be more of a sort of blurred continuum.”

And what about insurance? There are two paths that get insurance investor and founding Partner of Astorya.vc, Florian Graillot excited. The first is one that many will expect—cyber security. The second one gets much more interesting and is IT based on time. As Florian puts it: "If there is a bug in your internet connection, then that means you cannot access the Metaverse, and this could cause you all kinds of damages." Quite an interesting world to think about, getting damages because of lack of accessibility to the internet and a virtual world, which for many, may be their primary form of income in the future. Another path that insurance could potentially take in the Metaverse, is property insurance. It is very likely that there could be an insurance product for protecting your second life assets.