Blockchain, metaverse, NFT, digital currencies… The economy grows as the number of people using them increases. Industries are also trying to stay in this economy.
Among the sectors trying to adapt their pace to change are banking and finance. Because the dynamics of the industry are very likely to be affected by blockchain, metaverse, decentralized finance (DeFi) and financial technology (FinTech).
So, how did this period that promises radical changes begin, how is the banking and financial sector preparing, how are banks positioning themselves in the Metaverse, what measures can be taken? We asked Albaraka Türk Product Manager and Decentralized Finance Committee Chair of Metaverse Union, Çetin Emre Sadi.
Why now and not 92?
Çetin Emre Sadi recalls that in 1992 Neal Stephenson described the metaverse as a dystopia in his novel Snow Crash and draws attention to the following point:
“Why wasn’t there so much enthusiasm when the idea was introduced in 1992? First, the technology of that period was not suitable for this. Second, those who are going to invest in this company didn’t like it. Because no one wants to buy a dystopia.
So what happened after 92? Google and social media apps have entered our lives, the concept of the internet has changed for everyone. The first step that sparked the metaverse in 2008 was blockchain technology and bitcoin followed by NFTs.
Decentralized finance: Blockchain, bitcoin and NFT
Sadi; He defines blockchain, bitcoin and NFT as a triangle forming decentralized finance. With the popularization of blockchain and cryptocurrencies, decentralized finance is even more on the agenda. Sadi explains:
“Decentralized finance rejects any authority or intermediary. The ability to perform all financial transactions without the use of intermediaries is called decentralized finance. Does it exist now? No. Regulations and technology do not allow it yet, but it is promised.
“Financial players want to stay in the game”
As the Metaverse market volume is expected to reach $1 trillion in 2024, financial players are also taking steps to stay in this economy. For example, many banks from different countries, such as the largest US bank JP Morgan, have announced that they have purchased land in the Metaverse.
Sadi said: “Finance players want to stay in the game, but the decentralized organization, decentralized finance does not. “Can a financial world be created without me? is scared. “In order to avoid this fear, financial players prefer to stay close.”
Although the financial players remain close, they cannot currently offer any transaction, product or banking service on the metaverse. So what will they do with the land they bought?
Experience point, no branch
It is expected that the organizations that banks will establish in the metaverse will not be a bank branch but an experience point and will be used for advertising, promotion and public relations.
Sadi said, “Banks will set aside their core capabilities, they can’t in the Metaverse. They will organize events. They will collaborate with brands.
He adds that the biggest banks in the world are beginning to open positions for organizers of metaverse events.
FinTech startups are pushing the industry
According to Sadi, one of the reasons banks are taking quick action for the metaverse is that the industry is already being challenged by fintech startups.
“In fact, I feel that if a world settles on the side of the Metaverse and the decentralized organization grows stronger, my playing field will be seriously weakened in banks, just as Fintechs are now shrinking the space of banks. They can’t compete with FinTechs anyway. Banks make profits from core banking, yes, but FinTechs make big profits from product services. And small businesses have outstripped banks to become the biggest companies in the world.
Opposites will work together for a while
According to Sadi, disruptive innovation by its nature empowers it by competing with what it wants to destroy. Likewise, decentralized finance will strengthen traditional finance and fintech.
For example, NFT thefts are highlighted in digital media and the US-Canadian broadcast company Vice, with the headline: “NFT theft victims cry out for centralized rescuers.”
Sadi said, “DeFi is a challenge for traditional finance. So the opposites are to each other, but they’ll have to work together for a while, as I see it, they’ll have to grow together. There’s no other way to do it,” he says.