As at the date of publication, the bears are out in our markets. Crypto has not been spared with sources citing nearly USD1tn of value being wiped out1 in the past month amidst broader concerns on interest rates and inflation. It’s not a pretty picture, and comes after the negative publicity from one of the biggest hacks of a modern “play to earn” metaverse ecosystem2. Media articles on the blockchain, crypto, Web 3.0, DeFI and so on have an air of pessimism; quite different from some months ago when the space had a near-fanatical zeal obsessed with decentralisation and bored apes.

It is timely to take a step back and note that the short-term focus on the pendulum’s swing could detract from a longer-term conversation on the truth beneath the volatility – an important question on whether there is something genuine and real in the metaverse that we should be paying attention to, and that we could be distracted from because of roiling markets. We’d like to keep this conversation going.

Within this, DBS also wants to pepper the conversation on the metaverse – to season and infuse it – with subjects that DBS cares deeply about – human centricity, including customer focus and a view on social responsibility and sustainability. We do think this is a necessary adjacency to a discussion focused on the possibilities and promise of the underlying technology – a technology-centric view, so to speak. Incidentally, we’re not the first to advocate a human centric metaverse3, but we want to add our voice and thoughts to the importance of a human-centric view.

What is the metaverse?

First, let’s unpack the definition, because we think there is a danger of various perspectives only describing one part – an ear, a tail, a trunk, a tusk – of the elephant in the room. We think it’s not about Neal Stephenson4 alone, although – like much of science fiction – his vision deserves enormous credit for being decades ahead of its time. Nor is it about social networking or workspace collaboration alone.

It is also clear that neither Mark Zuckerberg’s perspective nor Neal Stephenson’s perspective is entirely congruent with the Web 3.0-centred view of token or NFT-based “play to earn” gaming metaverses. And that version of gaming – accepted and loved by some - is anathema to the non-Web 3.0 gaming community5.

DBS thinks it is more than that. The metaverse speaks to something fundamental in human psychology. Because it is an alternate digital reality, it gives humans a chance to break away from the constraints defined by the physical world and to have experiences otherwise impractical or impossible. The metaverse is so compelling because it gives humanity a promise of escapism, catharsis, progression and achievement, and more, with less or no risk.

In a sense, therefore, the metaverse is but an extension of what humanity can experience through proxies and storytelling, sparking imagination by engaging one or more senses. Since humans began sharing experiences, we have had the oral tradition, then complemented by written word, the motion picture, mass media and – currently - social media. An evolution of proxy experience from passive to active, if you will. In this sense, we like what Bob Chapek of Disney said in February 2022 – about the metaverse allowing a connection between physical and digital worlds, and next-generation storytelling. We think that’s the crux of things.

This is one of the reasons why a human-centred view of the metaverse is important – because it lends perspective which leads to definitional clarity. To us, the metaverse is about humanity living, playing and working in an alternate digital reality, and secondly, that digital reality interacting with physical reality6.

Why is the metaverse inevitable?

Note that we didn’t even ask whether it was inevitable. We think we’re way beyond that, because of something we’re going to call “demographic gravity”. In this, we are influenced by CFTC Chairman Christopher Giancarlo’s statement7 on crypto in 2019, advocating a regulatory stance that emphasised sound and efficient regulation, rather than a regulatory stance that outright banned crypto:

“Much interest in virtual currencies is driven by an emerging generation whose lives are increasingly lived in a global, interconnected, on-line world. It is a generation in which many would sooner invest in digital assets through their mobile phones than in corporate bonds through a stockbroker.”

As at the date of publication, three years has passed since 2019, and that emerging generation is now three years older. Since then, workplace environments have permanently changed in adopting online/offline hybrid work because of CoVID, short-format video has supplanted long-form video in social media, NFTs and play-to-earn models have emerged, Travis Scott and Ariana Grande have conducted online experiential concerts to a far larger audience than would be possible in a physical venue, and even ABBA is releasing their new album in the metaverse. Underpinning this has been continued development in the hardware and software powering the metaverse (more on this later), all of which our children understand and consciously adopt, and which our children’s children will – inevitably – unconsciously embrace. In other words, there is an inevitability associated with each successive generation increasingly living, playing and working in an alternate digital reality. Demographic gravity.

Instead, what we’re lacking is answers to 3 questions:

  • when is the metaverse?;

  • which business models will succeed in the metaverse?; and

  • for financial services providers like DBS, what is the contribution of financial services to the metaverse?

When is the metaverse?

Apart from driving your grammar teacher crazy, the question is illuminated by a human-centric view. The metaverse, necessarily, cannot and should not be limited to small pockets of adoption. It’s not merely about dozens hooked up via a local network, or thousands on a gaming platform. To power adoption, it also necessarily follows that the metaverse experience should, as much as possible, meet the likely wants and needs of a customer – a human being - interacting with that experience.

From this, it is possible to extrapolate insights that allow us to track required metaverse technology from emergence/experimentation to full maturity and adoption. We have identified three broad areas to watch:

  • immersion technology – replication of a full-spectrum human sensory experience as much as possible. Within this, the technologies to watch include the hardware and software8 for a real time photorealistic experience in a virtual or augmented reality, complemented, where beneficial, by artificial intelligence and machine learning;

  • delivery technology – the delivery of a full-spectrum human sensory experience in as accessible a way as possible. Here, there could be options. Running the metaverse’s digital alternate reality at a source and then delivering the experience via high-bandwidth low-latency technology to a thin client, or rendering directly on end-user devices with next-generation human-machine interfaces. A key pivot point is how accessible does the technology need to be in order to unlock mass adoption; and

  • digital asset technology – the ability to freely own and transfer digital assets within a metaverse and across metaverses, upheld by the prevailing legal systems of the physical world. This space includes the development of methods by which to represent, record and transfer property, and includes consideration of the blockchain and smart contracts.

There are issues with the current state of technology. It is perhaps stating the obvious that not everyone likes the graphics in Roblox or Minecraft. And workplace avatars which are cartoony or with limited customisation will be less likely to facilitate mass adoption. To run high-end graphics, we need high-end machines, and these machines and their associated peripherals are – currently – very expensive. And if we cannot truly own and transfer digital assets, then everything that has been accumulated and accomplished in one metaverse dies when that metaverse is no longer “cool” (or “lit”).

Each of these discussions goes much deeper. For example, regarding the subject of immersion, robotics and graphics experts often speak of the “uncanny valley” – that as we get closer and closer to human resemblance, we encounter a point at which the human emotional response changes from affinity to revulsion9. The challenge then is how to overcome the “uncanny valley” or facilitate acceptance notwithstanding the risk of the innate negative psychological response.

A human-centred view of the metaverse, therefore, allows us to examine and prioritise the likely physical wants and needs – sight, sound, smell, taste, touch – and the emotional or psychological wants and needs – ownership, achievement, intimacy, etc etc – of a customer in the metaverse, each delivered at acceptable cost. As we examine the maturity curve of the underlying technology we can form a credible view as to when the experience is ready for investments, mass adoption and the development of business models.

Which business models will succeed in the metaverse?

We like three:

  • businesses which successfully incorporate the metaverse into existing business models in a way which drives competitive differentiation (virtualising a production line, or a sales demonstration);

  • businesses which successfully create or orchestrate new experiences in the metaverse (gaming, high-risk exploration, social engagement); and

  • businesses which provide the underlying components (the “picks and shovels”) of the metaverse.

What is interesting is that the first two types of business models will need to focus on what we will refer to as content-driven experiences. Taking a human-centric view, the promise of the metaverse is one of proxy experiences engaging a wide band of human senses. Yet those senses need to be engaged in a way that sparks the imagination – otherwise, it is yet another cool thing but is short term until the next cool thing comes along. It stands to reason, therefore, that the most successful metaverses are the ones which have the best and most engaging content. And to put a sustainable lens on this, that content needs to be able to retain customer support in a generational way. Again, here is where Disney, or any other major intellectual property franchise owner such as Nintendo (Pokemon), is a strong candidate to be a winner10. These intellectual property franchises have the highest likelihood of being able to harness mass support through generations.

The other insight that follows, then, is that content owners and providers will decide the infrastructure, instead of the other way round. A technology-centric view launches NFTs ad infinitum, or enthuses over decentralisation for the mere sake of decentralisation. A human-centric view starts with the experience to be delivered, and then chooses the technology that best delivers this. The corollary is also that the content owner and provider has the commercial power to decide the technology infrastructure to be used, much in the same way Disney+ introduced competitive pressure to Netflix11.

However, this is not to say that the third category is always subservient. DBS does not think this third category is only about the streaming wars, Web 3.0 cross-chain interoperability protocols or NVIDIA’s next-generation GPU. We think there are some other perspectives to be considered, particularly when taking into account social responsibility and sustainability.

We already know the downsides of business models based on surveillance capitalism12. Where humans are the product and companies monetise behavioral insights, and humanity opens a Pandora’s box of irresponsible use of data, ungoverned or ungovernable artificial intelligence and known adverse psychological effects13. The online community has long known adverse social phenomena associated with the metaverse – “griefing”14 and “hikikomori”15, to name but a few. It stands to reason that one important “pick and shovel” for the metaverse is business models that risk manage these downsides. From the Internet came the cybersecurity industry; from the metaverse comes the opportunity, by design, to protect life, work and play in that digital reality.

Other business models are also feasible. For example, there is a potential tension between the transfer of property according to a smart contract, and a competing interest in that property introduced by the laws of the physical world – insolvency, garnishee orders, divorce settlements, and so on16. So another “pick and shovel” would be businesses that focus on the legal and regulatory frameworks for recognition and transfer of property interests in the metaverse, despite the interposed complexity of Web 3.0 and non-Web 3.0 function. This would in turn unlock the certainties necessary for lending, security, hedging, trading and risk management across metaverses.

The financial services perspective, and its contribution to the metaverse

Financial services does have opportunities too. Many traditional banks and even new entrants like digital banks and neobanks will be pursuing what DBS would characterise as “Outside In” business models – replicating banking experiences, customer engagement and branding with metaverse functionality. Much has been said on this subject already, so we will not dwell here. What DBS finds more interesting is the “Inside Out” business model – simply put, enabling and embedding value-added financial services into the metaverse, including facilitating exchange between digital and non-digital financial assets and flows.

The reasons for this are twofold. We already know about embedded finance – the idea that financial services can be designed into customer journeys – a loan and security package intrinsically forming part of a house purchase, rather than as a separate and distinct process (and this idea also comes about from taking a human-centred, customer-focused lens). The second idea comes from the fact that commercial considerations and competition will necessarily mean that we will see a “multiverse” of metaverses.

To arrive at this second conclusion, we should start with an assumption of heterogeneity of offerings and businesses in the metaverse. Social networking, work collaboration, games, online education, decentralised offerings, virtual manufacturing processes, and so on. And on one hand, we will clearly have “walled garden” metaverses; closed ecosystems with their own customer base, infrastructure, content and economy, with off-ramps to the physical world defined by the central actor in that metaverse. It stands to reason there will also be those who will take an open ecosystem approach. Hence a multiverse of metaverses, instead of a single homogenous metaverse. In this scenario, it is foreseeable that we will require interoperability and intermediation between metaverses, and between that multiverse of metaverses and the physical world. This interoperability is both technical and technological as well as economic and financial.

And here’s the kicker - like the interactions between economies in the real world, financial services is expert at economic and financial intermediation. The swap was born from exchange control; the equity derivative in part from foreign shareholding limits; securitisation from the need to unlock trapped value eating up balance sheets and capital limits; the payments ecosystem from the need to drive efficiencies at massive scale; and the foreign exchange and interest rate markets from the underlying trading, hedging and risk management activity at even larger scale.

Risk management is also where financial services has substantial experience managing through crisis, at both an individual bank level (credit, market and liquidity risk in particular) and at a systemic level. In some ways it is curious to see conversations swing from theoretical decentralisation to central bank intervention and regulation. In our view, there is a considerable middle ground to be explored by taking risk management lessons learned in the foreign exchange and credit markets and applying these lessons to “pegged” stablecoins, illiquid/disrupted market conditions, decentralised and hence trapped and non-interoperable liquidity pools and corresponding credit and counterparty risk exacerbated by withdrawal/redemption pressure.

From these insights, we can distil the following:

  • Financial services is not likely to be able to generate content sufficiently engaging to drive an “Inside Out” business model on its own. It is also hard to see a path to material competitive differentiation as opposed to incremental differentiation from focusing on an “Outside In” strategy.

  • A credible “Inside Out” strategy therefore involves financial services partnering with content giants or intellectual property franchises, and adding financial services expertise in co-designing for economic and financial interoperability between one or more metaverses and the physical world. This is not completely unprecedented – we already know of gaming universes which have, to an extent, sought to embed solid economic fundamentals into their in-game economies to manage patterns of supply and demand17. A fully-realised multiverse of metaverses will be several orders of magnitude more complex.

  • To add further value, such financial services providers need to be fully conversant with the “picks and shovels” of the multiverse of metaverses. Considerable inefficiency will be introduced if the financial services offering is incompatible with an on or off-ramp bridging metaverses with the physical world and vice versa. And a lot of this will happen if, for example, onboarding, anti-moneylaundering and sanctions tooling is stuck in the a non-digital age.

Put more simply – an “Outside In” strategy is not bad, but an “Inside Out” strategy is way cooler. And to put a human-centred lens on this, not only is it cooler, but designing for economic and financial interoperability is in the long-term best interests of society. Look at the froth coming out of the digital asset markets today.

We trust that this paper demonstrates that DBS is approaching the questions posed by the metaverse thoughtfully and from a strong human-centred lens. We certainly don’t claim a monopoly on answers, but we can promise an excellent, wide-ranging and fun conversation. We welcome any reader to engage, debate, and if we find common ground, to collaborate.

By day, Chee Kin is DBS’ Group Head of Legal and Compliance, but by night Chee Kin spends his time on some of the hottest games in the market. One of the most avid gamers you can find, Chee Kin has been gaming since 1984, from the earliest days of Ultima and Choplifter in their full pixeled glory, to the age of 3D (think Doom, Quake, Wing Commander), and the epic era of MMORPGs (World of Warcraft, Guild Wars, to name a few).


1: Forbes, 12 May 2022

2: The hack of the Ronin bridge on 29 March 2022, impacting the leading “play to earn” metaverse game, Axie Infinity.

3: See David Krum’s presentation at the IEEE VIC Summit on 13 May 2022.

4: His book, Snow Crash, published in 1992, is widely cited as the origin of the term “metaverse”.

5: his community tends to reject aspects of monetization – loot box mechanics, for example, or top-up purchases for game advantages – in favour of focus on level-playing field game mechanics and compelling game experience. Earnings calls by Electronic Arts in 2021 were met with derision in this community, and by February 2022 Electronic Arts was no longer actively pursuing plans to embed NFTs into its product lines.

6: These metaverses obviously operate on and are consumed through some kind of physical infrastructure, and humans (for now) still eat, breathe and reproduce. More on this physical/digital interaction later, because it opens up a great discussion on interoperability.

7: At the ABA Derivatives and Futures Section Conference, 19 January 2019

8: Quantum could contribute as well, although more needs to be seen as to how quantum graphics beats or supplements graphics rendering in classical computing.

9: The Wikipedia article on this subject is quite informative.

10: It also follows that just focusing on enabling a virtualised experience is insufficient. It must drive a deeper underlying job to be done – a manufacturing process that is made better because of virtualisation, a virtualised hands-on test of a new car’s limits without the risk of a high speed crash, or the ability to be an emperor among kings.

11: There is a counter argument from the way Apple disrupted the music industry. The difference lies in the way we see, today, creator ecosystems become more dominant – for example, the way Taylor Swift is re-recording her catalog, and her fans supporting the new recordings, leading to a diminution in value of the old catalog and the intellectual property therein. This is also why we prefer to focus on content and customer engagement as opposed to intellectual property.

12: A fascinating, descriptive and emotive phrase attributed to Shoshana Zuboff, 2019.

13: The Social Dilemma, Netflix, 2020

14: When a player in an online game ceases to play the game but instead devotes conscious effort to making others’ experiences as negative as possible, including by misusing game mechanics for unintended purposes.

15: A phenomenon first identified in Japan, involving near-total social isolation from physical human interactions, including from work and friendships/love, with online or other non-human surrogates substituting for such interactions.

16: Litigation in this space has already started in both UK and Singapore.

17: One of the best examples is Eve Online.