TIDMTNT
Tintra PLC
15 June 2022
15 June 2022
TINTRA PLC
("Tintra", the "Group" or the "Company")
Recent Press Articles
"Western banks seem more likely to enter the metaverse than
emerging markets"
Richard Shearer, Group CEO, recently authored an article on
"Western banks seem more likely to enter the metaverse than
emerging markets", which was published in Global Banking &
Finance Review, a leading Online and Print Magazine, which seeks to
provide a more balanced view, for informative and independent news
within the financial community. The article can be viewed online
at:
https://www.globalbankingandfinance.com/western-banks-seem-more-likely-to-enter-the-metaverse-than-emerging-markets/amp/
A full copy of the text can also be found below.
For further information, contact:
Tintra PLC
(Communications Head)
Hannah Haffield
h.haffield@tintra.com
Website www.tintra.com 020 3795 0421
Allenby Capital Limited
(Nomad, Financial Adviser & Broker)
John Depasquale / Nick Harriss / Vivek
Bhardwaj 020 3328 5656
Western banks seem more likely to enter the metaverse than
emerging markets
By Richard Shearer, CEO of Tintra PLC
When it comes to digital change and the embrace of new
technologies, Western banks are becoming increasingly
forward-thinking - an attitude which they have yet to apply to
their relationships with emerging markets.
This proactive approach towards (limited) change shone through
in a recent speech by Pentti Hakkarainen of the European Central
Bank, who was quick to point out that customer demands and
pressures to increase efficiency "are leaving banks with no option
but to use modern technology." Of course, as this phrasing implies,
embracing digital change doesn't always come easily to incumbent
banks who inevitably shoulder the weight of legacy
infrastructure.
Nevertheless, as a 2020 report from the OECD spells out,
"banking is undergoing a transformation from being based in
physical branches to using information technology (IT) and big
data" - and Western banks are well aware that if they don't embrace
this kind of transformation, there are plenty of FinTechs and
neobanks ready and willing to fill the gap.
The report goes on to note that this tech-based competition may
well lead to increased risk-taking from incumbents: a change in
attitude which, while encouraging, equally invites us to raise an
eyebrow at the areas in which Western banks have let perceived risk
dominate their actions - including their reluctance to enter
emerging markets.
Digital change
It's not controversial to state that Western banks' recent
transformations are a product of evolving expectations from
consumers.
As a recent report from EY noted, today's consumer expects their
entertainment delivered via a frictionless streaming service, and
they expert their shopping to be conducted through a few taps on a
smartphone - so, naturally, financial services are conforming to
similar principles.
And, of course, incumbents are by no means in the clear when it
comes to meeting those expectations - the EY report does go on to
say that while incumbents are still ahead when it comes to primary
financial relationships with customers, fully digital neobanks are
"gaining ground" in a way that should concern the banking
sector.
All the same, between potent competitive pressures on the one
hand and the increasing weight of consumer expectation on the
other, it's no wonder that the likes of Kearney have found that
most banks are accelerating their digital strategies - they really
have no other choice.
In fact, Western banks' new-found willingness to consider fresh
technological avenues is exemplified by a particularly striking
form of digital acceleration: entry into the virtual worlds of the
metaverse.
Becoming a part of the extended reality
While establishing a presence in the metaverse might seem par
for the course in the context of some disruptive newcomer, several
big-name incumbents have been quick off the mark - in fact, they've
literally marked their territory in some instances through the use
of Decentraland, a 3D virtual space in which users can purchase
plots of digital land.
Such was the widely-reported case for JPMorgan, which now boasts
a metaverse "lounge" - a move made in anticipation of widespread
customer adoption of this latest tech trend.
At present, of course, this lounge is just a largely empty space
- but given the close links between the digital worlds of the
metaverse and digital currencies, including decentralisation and
the use of blockchain, and bearing in mind the growth of online
transactions more broadly in recent years, there will soon be fully
functional banks that operate entirely within the metaverse - with
Tintra building, what we believe to be, the world's first Web3
enabled bank.
According to a recent prediction made by Gartner, 25 per cent of
people will - as soon as 2026 - spend at least an hour per day in
the metaverse.
By this point, the firm anticipates that this kind of virtual
reality won't be the sole province of video games - instead, users
will spend their hour or more engaging in work, education,
shopping, and social interactions, highlighting the value of banks
swiftly staking their claim to the metaverse and related
technologies.
Even leaving aside the complexities of digital currencies and
banking functions, banks will simply need to ensure they can engage
with customers - and, if Gartner's projection is correct, a portion
of that engagement will need to take place in virtual
locations.
Continued perceptions of risk for emerging markets
While incumbents are undoubtedly making sensible moves towards
digital change, it's difficult not to make this kind of comment
without a tinge of exasperation: for all their forward thinking,
Western banks are more prepared to enter virtual reality than
emerging market countries.
According to research from BIS , emerging markets have seen huge
decreases of reliance on foreign bank credit from 2008-2018,
underscoring Western banks' lack of presence in such countries.
The reason for this kind of retreat is, as I've mentioned, due
to perceptions of risk: as one Economist report puts it, Western
banks "have shunned faraway borrowers since regulators asked for
more capital to be held against exotic bets."
Of course, the irony here is that while incumbents are reluctant
to enter emerging markets, choosing instead to direct their more
progressive inclinations towards digital change, emerging markets
are comprised of young, tech-savvy populations who would be fully
prepared to engage with digital financial products.
Just a glance at McKinsey's Personal Finances Survey 2021
analysis is enough to solidify this claim, with the firm noting
that:
"Consumer use of digital banking in Asia-Pacific has entered a
stage of acceleration, fuelled largely by innovations launched in
emerging markets. Nearly nine in ten consumers across the emerging
and developed markets of the Asia-Pacific region use digital
banking actively, and most of these are open to purchasing more
banking services through digital channels."
As such, while Western banks are wise to enter digital spaces
like the metaverse, this forward-thinking approach falls short of
truly taking advantage of worldwide demand for digital
services.
As incumbents embrace digital change while refusing to change
their attitudes towards tech-hungry markets, it remains to be seen
whether or not Western banks are - as they say - missing a
trick.
ENDS
https://tintra.com
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