Reflection: Payments Opportunities in a Disillusioned Metaverse
One of the most humbling parts of my work is exploring where we predicted trends incorrectly, and reflecting on how the changing tides will impact the future.
Last week, I gave a fireside chat about Payments in the Metaverse where I had the opportunity to do this alongside my peers at American Banker’s Payment’s Forum.
When we planned to talk about Payments in the Metaverse months ago, we were hopeful that breakthroughs in the technology or increased adoption would shine a light on where retailers and FinTechs had been successful, and how others could explore building products on the bleeding edge.
But the trend shifted, and so did our conversation. We discussed how to evaluate a trend that’s decelerating, where the catalysts might come from to accelerate it in the future, and how FinTechs can think about building products and integrating payments.
For me, the Metaverse has been the hardest trend shift to reflect upon. Not because I was particularly bullish on the trend, but rather because I hadn’t accurately calibrated all of the incremental innovation that needed to come for it to reach the masses.
I think we can all agree — The metaverse trend has softened.
It’s not uncommon that trends are hyped and then fall out of favor; in fact it’s so common that Gartner creates Hype Cycles for just about ever industry imaginable.
What is uncommon is to see so much investment — entire shifts in strategy and in company purpose — poured into something only to see it de-scoped in a timeline that can be measured in months.
With that as the foundation for reflection, let’s dive into the insight I shared during the fireside chat and the advice I gave to FinTechs looking at where to go next.
Current State of the Trend
In early November of 2022 I was looking out to the new year and preparing for the trends my team would focus on.
The Metaverse was all a buzz.
We were in the midst of drawing inspiration from our physical company spaces and recreating them in Decentraland with hopes that we would establish a foundation where we could activate unique experiences to test new products and capabilities.
Regardless of your own predictions, it was hard to ignore the investments pouring into the space from some of the largest rain-makers in the tech industry.
Fast forward to May 2023, the trend has given way to the promise of Generative AI and yielding excitement as the metaverse experience has proven to be inadequate for most.
This is to be expected, as the evolution of technology takes time. Over the last 25 years, smart phone technology evolved from the palm pilot to the blackberry, and now to the iPhone. We are arguably still in the “palm pilot” phase where we are developing the hardware needed to make the metaverse functional.
The blockers facing the metaverse have brought us to a pause. Hardware challenges, the lack of a viable input device, clunky software, and a
But even with all of that, I believe this is a pause and not a stop. That’s because there remain valuable use cases that could be solved for millions of people, and with the right catalyst, the trend will pick up once again.
Where We Look for Signals
If the trend is hitting a pause, then this is the moment where we take a step back to identify the opportunities we were exploring, and what signals we’ll be looking for to move the trend forward again.
Once a trend appears to be impactful, I like to take a step back and ask “who will create the catalyst?”
There are times where the answer is “my industry” — we will create the change that empowers embedded finance, a wallet-less consumer, and the future of identity.
Other times, we need to be watching for the catalyst, a humbling statement where it becomes clear that we will not create the metaverse, a connected car, or web 3.0 — we will create products within those spaces thanks to the catalysts of others.
As the metaverse loses some shine, I encouraged attendees at our fireside chat to look for the catalysts that will polish it back up and get it ready for the mainstream.
Here are three that I’ll be watching for:
Improved Hardware: The current hardware is heavy, uncomfortable, and struggles to alternate between immersive virtual reality and mixed reality. Changes in the devices might make them more appealing to mass-market users, opening new opportunities for growth.
A New Input Device: This links closely to hardware, but I feel it’s important enough to stand on its own. Current input modalities don’t work for mass adoption. Hand controllers are clunky, a secondary device like a phone seems duplicative, and waving your hand in the air is a great way to stand out in a crowd. When a new input device is developed, we’ll start to see some walls fall down.
Elimination of Steps: The process of engaging in the metaverse today is not for the faint of heart. Interoperability doesn’t exist yet, meaning users are re-creating worlds, spaces, and avatars as they move among them. There’s also some work that goes into diving into the metaverse every time, which is a barrier for short attention spans.
How to Prepare and Remain Consistent
The metaverse’s impact may feel small right now, but that’s largely impacted by how nascent the trend is. With few people using it and low adoption from corporations, the rails haven’t been built to make technology easy to integrate.
It’s important to ask yourself “what if…” and try to answer with how you would need to pivot and respond.
What if payments need to work in the metaverse? With the current method of converting FIAT to crypto, many consumers feel left out of making purchases. How would integrations of the 4 major networks impact your ability to sell? Would the experience offer new ways to integrate API-based payment methods, and if so, would that change how you develop your strategy?
What if the metaverse solves for digital problems we have today? Online and mobile shopping work phenominally well when you know the product you need, but the “wander” or “treasure hunt” experiences are still yet to be reproduced in a way that feels authentic. If the metaverse can solve this problem alongside existing digital properties, how will that impact shopping and what will you have to do to make them co-exist for your brand?
What if my brand needs to evolve to fit the space? Just like social media had an impact on a brand’s voice and customer interactions, so too might the metaverse. With the ability to build immersive experiences, will the expectations of brands be to interact in new ways? What would that mean for your team, marketing strategy, and the talent you need to acquire?
It’s hard to say how close the catalysts are, and if the pause will become a stop. Perhaps my reflection piece years from now on this post will surprise me.
Until the future comes, it’s our job as innovators to acknowledge the shift, prepare for re-engagement, and share knowledge. It only takes one catalyst to shift the dynamic all over again.
