By AAT Comment Future of accountingWelcome to the Metaverse – here’s how it could affect accountancy14 Nov 2022 The Metaverse may seem difficult to grasp, but its creation will likely prove to be a watershed moment, writes Jawad Ashraf, CEO and Co-founder of Virtua. Last year saw the term ‘Metaverse’ propelled into the mainstream media following Facebook’s announcement of its rebrand to ‘Meta’. However, as time has passed and we’ve all tried to come to terms with the concept, its meaning hasn’t become any clearer. If anything, the debates and discussions surrounding its definition have only served to muddy the waters.So, what exactly is the Metaverse? And where does the term come from? Defining the ‘Metaverse’The phrase was first coined by Neal Stephenson in his 1992 book, Snow Crash, describing a virtual environment that was widely used in his dystopian vision of the twenty-first century. Stephenson’s book portrays the Metaverse as a planet-encircling market where virtual properties may be purchased and sold and where VR goggle-wearing individuals reside as 3D avatars of their choosing. Similarly, a virtual reality interface, digital ownership, and avatars are still central to modern concepts of the Metaverse. However, none of these is necessary to the concept. The Metaverse concept was then taken to the next stage by Ernest Cline in his 2011 book, Ready Player One, which took Stephenson’s vision for the metaverse and merged it with pop culture. The adapted film by Steven Spielberg, perfectly demonstrates Virtua’s ambition for the metaverse, and that’s why we held an exclusive screening at BAFTA for our launch in 2017. Today, the Oxford dictionary defines the Metaverse as a “virtual-reality space in which users can interact with a computer-generated environment and other users”. But what does this mean for ordinary people and businesses? How will it change our daily lives, and will it be for the better? The internet has already changed our lives in every aspect, from how we consume entertainment and access healthcare, to how we communicate with our friends and loved ones. It has been one of the major forces of societal evolution. However, even the internet itself has transformed. At its inception, it was a ‘read only web’ or Web 1.0, it then evolved into Web 2.0, which saw the birth of social media and a more participative social web. We are now moving into the next evolution of the World Wide Web which is known as Web 3.0. In Web 3.0, the aim is for users and the wider online community to have decentralised ownership of, and control over, the internet as part of a more immersive experience.Finance and the MetaverseJust as the internet, mobile phones, and computers revolutionised technology, business, and society as a whole, the Metaverse will provide a similar watershed moment, and lots of businesses want to get ahead of that.JP Morgan was the first bank to enter the Metaverse, and it did so with much fanfare earlier this year. Since then HSBC, Caixa, Kookmin Bank, and many others have followed suit and are beginning to launch initiatives that will bring their businesses into the Metaverse. But how will this benefit them and their customers? Finance institutions, which are leading the race – joining and creating their own virtual worlds – are already showing us the different ways the Metaverse can assist the provision of financial services. These include:Early-stage opportunism – Anywhere there is an exchange of value, including in virtual worlds, a financial system is necessary. And by leveraging the banking sector’s current infrastructure using mobile devices and internet applications, the Metaverse offers banks the opportunity to provide a more individualised and immersive virtual banking experience. Most companies would have adopted the internet sooner if they had anticipated how successful it would be in the late 1990s.The evolving world of customer service – Online banking services have advanced dramatically over the years, so much so that traditional brick and mortar banks are beginning to disappear. However, the Metaverse provides the option for many institutions to continue providing what they view as face-to-face human services.The new age of currency – Crypto is king in the virtual world, and many companies are already conducting business in the Metaverse using a variety of digital currencies. Working with this kind of digital money involves payments by nature, thus in order to be profitable, banks and fintechs need to think about incorporating these cryptocurrencies into their services.Branding opportunities – People are unlikely to go to the Metaverse to visit their bank because transactions can be made quickly online and especially as going to a bank, even a virtual one, isn’t the most enjoyable of errands. However, by joining the Metaverse, these organisations remain relevant and leave their mark and allow themselves room for expansion. Accountancy in the MetaverseOne industry within the financial services industry embracing the Metaverse and the opportunities it presents is the accountancy sector. Already assimilated by a number of major players, including KPMG US and Canada, PWC Hong Kong, and Prager Metis, with PWC Hong Kong becoming the first member of an internationally recognised professional services network to publicly buy virtual land. Prager Metis opened a virtual three-storey property, becoming the first CPA firm to officially open its Metaverse headquarters.The Metaverse holds the power, among other things, to transform client relationships and employee interactions. Here’s how:Reimagining customer interactions – The metaverse opens up opportunities for client engagement, using the virtual environment to facilitate stronger customer connections in a more engaging way that will benefit firms in more ways than one, such as having access to a global hub in the metaverse that is able to serve millions of customers, instead of having brick and mortar stores in every city.Scope for training – With employees spread across multiple locations it’s becoming increasingly difficult to facilitate employee development. Accountancy firms can counteract this by offering real-life experiences with face-to-face training by utilising virtual and augmented reality, as well as 3D avatars, in the Metaverse, engaging their employees to a higher extent.Free from distraction – Remote working can have many benefits, but some people lack the physical space in their home to create a distraction-free workplace. It would be easier for employees to focus if they could operate in a virtual office setting using virtual reality. Considering working from home can be alienating, this can boost employee motivation and satisfaction. In virtual reality, collaboration and the illusion of being somewhere else can significantly increase productivity.Employee engagement – With remote working now central to the workflows of many businesses, colleagues are able to meet in the metaverse, bridging geographical divides and creating a more interactive and intimate encounter that facilitates more efficient decision-making.Integration with blockchain technology – Creating an immutable record of all interactions and transactions within a virtual space. Food for thoughtBy concentrating on embedding finance and strategic relationships at the core of their business plans, organisations will be able to sell to both consumers and businesses. However, this will need a tremendous amount of work that not only transforms their existing technology but also their entire business approach.The shift towards digital ownership and the willingness of consumers to enter the Metaverse, highlights the need for banks and financial institutions to create a metaverse strategy.That’s where their customers will be, especially future generations. The establishments which manage to differentiate themselves and join the Metaverse, are the ones who understand the importance of making the management of finances and transactions immersive and comparable to real life. By concentrating on embedding finance and strategic relationships at the core of their business plans, organisations will be able to sell to both consumers and businesses. However, this will need a tremendous amount of work that not only transforms their existing technology but also their entire business approach.About the authorJawad Ashraf, CEO and Co-founder of the Metaverse platform Virtua. The organisation has carried out research into the shift towards digital ownership and the willingness of consumers to enter the Metaverse. Learn more here. AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.