Money20/20 Europe: Highlights from day two’s conversations

Day two of Money20/20 Europe in Amsterdam was as jam-packed as the first. Here are some of the key takeaways from the day’s sessions, spanning the future of a digital euro, through to the role for FinTechs and banks in the metaverse.

What are the opportunities for banks and FinTechs in the metaverse?

The metaverse has generated much buzz, but are there real opportunities for financial institutions?

“While marketing is the first obvious use case of the metaverse, I wouldn’t say it’s a gimmick,” said Jelena Zec, who leads Citi Ventures’ investment activities in Europe.

One challenge that Jelena highlighted is how average people can participate in the metaverse without having to use crypto, given that in terms of adoption, crypto has not reached mainstream penetration.

“That’s where banks, working with FinTechs, can definitely come up with solutions, and solutions that help people feel more safe and confident in venturing into this new metaverse.”

Steve Suarez, Global Head of Innovation, Global Functions at HSBC, pointed to Bloomberg research which found that the global metaverse revenue opportunity could approach $800 billion, as well as a prediction from Gartner that 25% of people will spend at least one hour per day in the metaverse by 2026.

“Is that really something a market will want to ignore? Obviously not,” Steve said.

“Our external customers are already spending money in the metaverse, they’re buying digital assets and are looking for places to park and display those assets,” he went on to say. “We also have customers that are thinking about starting businesses in the metaverse… How do you give out a business loan in this space if you don’t understand it?”

Jelena added that private bank customers are increasingly asking to diversify their portfolios to include crypto assets, “so private banks have to be able to offer that diversification in a safe manner.”

Additionally, there is an opportunity for banks to play a role in financing the build of the metaverse itself. “At Citi Ventures we are very bullish on Web3, and we want to invest in the companies that are building the infrastructure around it,” Jelena went on to say.

How soon might we see a digital euro?

A panel of industry leaders hashed out the future of a digital euro at a panel session on what a European CBDC could mean for market participants.

Marion Laboure, Senior Strategist at Deutsche Bank & Lecturer at Harvard University, opened by highlighting that the Eurozone is “slightly behind” when it comes to the CBDC journey compared to some of its international counterparts, such as China, Sweden and Nigeria.

Inge van Dijk, Director Payments & Market infrastructure at De Nederlandsche Bank, offered a central bank perspective.

“From what we’ve seen in Sweden, and also to a certain extent with the COVID-19 crisis and the rapid reduction in cash, is we have come to understand that at a minimum, as central bankers we need to ensure we have a thorough investigation and that we really understand whether we need it and how we need it.”

Inge said that the European Central Bank’s investigation phase is moving as fast as possible to seek out answers, but that it involved “complex stakeholder management” in understanding the views of all parties and making sure that any solution would work across regions.

“Whatever we do when we build is going to be something that is interoperable with the rest of the world and the other CBDCs,” she said.

Adam Gagen, Global Head of Govt Affairs at Revolut, said he believes a digital euro is coming – and soon – but the industry needs to pay greater attention to CBDCs.

“This is going to be happening much faster than we believe that people in the general industry perceive today,” he said.

Echoing that sentiment, Marion said: “Two years ago the debate was whether or not we would get a CBDC, but it has evolved very quickly and now the question is when it is going to arrive.”

However, Adam highlighted the semantics around CBDCs, which he said means that not everyone is clear on what purpose a digital euro might serve.

“Language makes it difficult,” he said. With the proliferation of digital payment innovations, mobile banking apps and e-commerce, the average consumer already feels as though they use digital currency, he explained.

“The way I think about it is as a programmable euro. I think that unlocks the value that’s going to be created by this new form of money, that central banks and the key innovators in Europe are actually going to be able to create. That’s going to impact every single one of us here today.”

Henrik Gebbing, Co-Founder & Co-CEO at digital asset management firm Finoa, highlighted the need for the Eurozone to keep pace when it comes to crypto and the wider ecosystem.

“Let’s not fall behind in Web3 as we did in other industries,” he said. “Let’s build it right and with the right architecture.”

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