Good morning, everyone, or good evening, wherever you are. Really excited, and thank you for joining us today. I'm very excited to introduce some amazing guests today. We're going to have an incredible topic around the possibilities of the metaverse and how FS can embrace digital assets in Web3. We've certainly seen some significant announcements over the last month or so, whether it be the partnerships of Google and Coinbase or BlackRock and Coinbase or what MasterCard is doing or BNY. It's clear that what's changed in the last couple months, even with all the volatility that's going on in the marketplace as it relates to digital assets and crypto, is you've seen a lot of retail exit. What's been exciting is you've seen a lot of institutions now enter, which is usually a very good sign for the long term. We're super excited. We've got an awesome panel today, and I want to introduce our first guest, who is an incredible thought leader in the space, Ray Wong. Ray is Constellation Research's chairman and founder. He advises companies on the future, leveraging disruptive technology with business strategy to help enterprises unlock value in the marketplace. He's also got an incredible podcast called Disruptive TV with over 50,000 listeners per episode. He writes a blog. He's well-quoted in CNBC and the Wall Street Journal and also has wrote several books. We're honored to have him on and very excited to hear what Ray has to say about the space. Ray?
Thanks a lot for having me. How are you doing?
Good. All good. Let's start by talking about where we are in the metaverse, and we'll share a little bit of what's going on there, and then we'll jump back to everybody else on the team, if that works. When we think about the metaverse, let's set the stage and talk about what's new, what's happening, why this is important, and we'll share a little bit here of what's going on. The question we always have to ask, of course, is, are we in the matrix? The answer is, we don't know, but we'll start with that as kind of a starting point, but it's really a bit different. We are in the midst of a massive transition where we go from 2D to 3D. We go from centralized to decentralized. We go from Web 2 to Web 3, and we go from journeys to scenarios and scenes, and that's really what the big transformation is. It's an extension of where we are in the web, and we are, in some cases, very early. In some cases, we're actually in the middle of that expansion and that level of adoption. What's the future of this? Well, it's really about these new 3D experiences that are happening, sitting on top of where we are. Now, there's a question about whether enterprises and institutions have a role, and as Dave's saying, it is definitely happening today. We are seeing that pickup, and people want to know what these are, what are use cases, where can they play a role, anything from what's happening in country back, digital currencies, to the ability to do cross-border settlement, to the ability to think about digital asset settlements. All these things are starting to take face, especially in the industries we're talking about. But what I want you to do is reset your mind and think about this frame shift of getting out of gaming. It's really beyond that when we think about this bigger concept of where we are in the metaverse economy. Yes, we all know it started here, the concept in Snow Crash about these new types of worlds. That was an awesome book. We kind of visualized this in the back of our minds when we thought about the movie Ready Player One. I'm sure many of you have seen this, but there are things that are happening, and I take some examples outside of banking and financial services intentionally. We're seeing, for example, digital twins emerge in terms of heart surgery, the ability to actually bring in thousands of students to see what's going on. But not only is training going on here, they're also learning from the physicians, and they're building new models of what's going to happen. And just like we do that in consumer behavior in terms of preferences or in terms of stock market analysis or trading, you're going to see that across the board. And so we're going to be able to replicate and create what we call digital twins across every one of these areas. But the most important piece is the fact that we're in an infinite world, infinite possibilities in these worlds of virtual worlds that's creating these market trends. Now, this is a big market, right? We are sizing it at almost $20.7 trillion across different industries. But keep in mind, sizing this is like sizing what the internet was looking like in 1996. We had all these different components, right? There's this weird thing going on called AOL. There's this very other thing that's happening called browsers and Netscape, right? And of course, there are new languages like HTML. At that point in time, we didn't see that as a holistic whole of the internet economy. We saw them in different pieces and parts of technology, and things were changing. Commerce sites were being popped up, right? New ways of doing business were going on, and that's where we are today. Now, one way to take a look at this is thinking about how the immersive areas kind of began. And a guy named John Radoff, he came up with a way to think about what we're trying to do from anywhere from the experiences that we're seeing to how we actually interact with infrastructure to the different interfaces and, of course, what was happening along the business networks of creator economies. These are all creating some of that, but we have a different way to kind of explain what's happening that's akin to where we were with the internet. There are five components of this metaverse economy ecosystem, and the first one is the one that we see. It's the most visible one. It's, of course, the interfaces. And today, they look like this. We put on a headset. It's a little clunky. It's very rich and immersive. The battery lasts for about 45 to 50 minutes, and if you're like me, by 30 minutes in, sometimes you're a little bit dizzy. Not all the time, but sometimes. But here's the good news. We're really close to getting to a point where the interfaces get thinner and thinner, and over time, you'll get to a point where it'll be like headsets. It'll be devices that are there, and we're very close to the point where we'll get minority report type gesture type interfaces where we can move things, see things, get the transparent different layers, and that's the power of what we're getting to. And that's actually how adoption is going to improve in terms of being able to, for more people to get the ability to use and access the metaverse with just a simple camera on a phone or on a laptop. We could get to a point where something gets plugged into the back of your head, right? If you're ready for that, we'll get to human APIs and different interfaces. That's the first part. The second part are the worlds, and we call them the metaverses. These are digital experiences and worlds, and how many of you used Second Life before? You can admit to it, but if you haven't gone back, it's a lot more richer, and we're seeing those experiences. We're seeing what's happening in Roblox. People are doing banking in Roblox. You saw JPMorgan Chase. You saw other banks jump in. Banks are buying digital real estate in these worlds to have a presence, to be able to do transactions, to be able to connect, and of course, we're seeing other things happen from gaming platforms. This is Unity. They've got 80 billion devices where you can actually serve up these 3D experiences, and of course, digital twins play a role. This is Matterport in the real estate space, and of course, they're interoperability platforms that are coming to life from NVIDIA. Now, the next part, which to me is one of the most important pieces, are DAOs, and if you haven't heard what a DAO is, they're Decentralized Autonomous Organizations, and what DAOs are doing, it's providing the ability to take what we call the creator economy, meeting these multi-sided networks on the back end, and what that means is we can define how you belong to the club. It's a membership model. It's a governance model. How do you vote? How do you actually become a member? What do you actually have to do? How are you rewarded? What are the rules inside this? What does value exchange look like? And a big part where BFSI plays is really where we are in token economics and in value exchange. So, we've got funding mechanisms. You could fund a DAO, right, and, but wait, that's like funding a startup. Oh, wait, that's like getting shares. Oh, wait, what's my voting rights? What does the governance look like? This is all happening autonomously, right, and that's really the speed and power of actually a DAO, where a lot of these decisions are being made automatically. A lot of them are being made in, like, with stakeholders who actually have votes that can actually, you know, make certain decisions, and, of course, you get different levels of decision-making depending on your status and your level in membership interest. Then, of course, in the middle of this is the blockchain and the crypto tech that's behind this, and this is really actually how we build and secure value exchange. So, you know, these technologies are playing a big role, especially, you know, in creating new types of digital assets. Now, Rise of the Apes, everybody knows this is Bored Ape Yacht Club. This is one of the areas that kind of started the conversation as to, wait, what is membership, right? What is a digital asset? But a lot has happened here. However, I do have to warn you, broadly speaking, these are things like collaboration and meetings, we're changing the way that we're actually doing internal meetings, but it's also happening in recruiting. One of my favorite ones is actually no bias recruiting. My avatar interviews your avatar. You can't tell gender, you can't tell race, you can't tell skin color, you can't tell anything, right? You can't even tell intonations, right? So you can tell, I mean, I don't know, I sound like an East Coast guy, but with a West Coast accent. I don't know, what is this, right? And all that goes away. And so you get some very interesting things that might pop up. We're also seeing some things with training. You say you're really good at customer experience, well, let's go find out, right? We can do that in the recruiting piece. If you're not good, we can give you training for upskilling and reskilling, right? And of course, we can get you into other areas around creating simulations inside it, like the banking experience, the retail banking experience. Let's go simulate that. What's that going to look like, right? And then of course, we see commerce and customer experience play a role. Advertising and search are an area that is going to change. You've got infinite real estate, right, to be able to create suggestions. And one of the things that we talk about is the need to build ambient experiences, things that are natural. They're not in-your-face advertising. You mentioned you like something, there's certain things that pop up, right, that allow you to take next best action. You've got a problem, certain resources come to you. It's all in the background. And at Concept, we call it dynamic scene generation. And then of course, there's marketing opportunities. There's ways to rethink how we actually do sales, how we do areas in wealth management, right? Some are self-service, some are high-touch. How do you actually recreate those types of experiences in the commerce world? And of course, there's things that pop up in terms of the way we do live events and product launches. They're all going to play a role. The mall is definitely back, but there are going to be digital malls that pop up. And just as Vlad was saying, right, it's like metaverses today. Everyone's going to have their own metaverse, but they're also going to participate in another metaverse. Just like you had your own website, but you were part of something else bigger, right? And so all these different worlds will come together. But back to you, Nicole.
Thank you. So Sergio, do you have anything to add in terms of other use cases?
Well, I agree with Ray. There's, you know, 40 easy ones, but probably 400 out there. I think for us, the conversations we have here are fireblocks. You know, the first thing we tell clients who maybe think, well, this metaverse thing, is it a fad? Obviously, you know, people look at NFT prices. They've come off a lot since the highs last year, but are still up multiple since two years ago. Was it a fad? Was it, you know, Beanie Babies? And so we like to help them think to remove the signal from the noise, right? What is it that you want to get out of it? For us, this technology really helps you lower barriers, remove that barrier. Obviously, that's what tech does. That's what it's done forever. And so we take a step back and say, OK, what is it that you want to do? We get a lot of feedback from traditional banks that say, hey, our deposit base with the younger generations are not growing because, you know, that money, those assets are going to more fintech stuff. They're going to crypto things. They're going to robo advisors. How do we use this to capture that and get back in with those types of clients? And so I think the use cases are millions out there. I really think it comes a matter of asking ourselves or, you know, as a bank or financial institution, what is it that you want to do with this technology and then focus on coming to events like this, talking to people like Ray and really try to determine the best way of going about it.
Thank you. So, Sergio, just building upon that, you know, and thinking about these use cases, what are some actionable short to medium term actions that a financial institution should focus on when coming and thinking about deploying any kind of, you know, Web3 or metaverse strategies?
Sure. I think the lowest hanging fruits is really taking advantage of, you know, the crypto rails, like the metaverse, yes, virtual reality, AI, but really what I think ties it all together is those crypto blockchain rails, public blockchains, right? They're composable, they're public. Anybody can access the information on them. To Ray's point about identity, you can take your identity from one universe to the other. And let's say you can do royalty programs, which is what we're seeing with some of the largest corporates in the world where they're realizing, hey, I can drop an NFT to my client and think of an NFT, not like a board ape or a crypto punk, but really a unique digital asset, kind of almost like a cookie that lives outside the browser and can go anywhere. And so you can drop an NFT that is a royalty NFT for free. You don't have to sell it. Obviously, the numbers that some of the companies have been able to do are eye-popping and amazing and interesting. But really, the power lies in saying, OK, here's the token now sits in my customer's wallet. Let me track it. Let me see what else they do. What else are they doing in the metaverse, on chain, on crypto, and really using that as almost like a global CRM. You're able to reward your customers. You provide them with value through different airdrops. You can partner with creators and artists and send them something really, really cool. But at the same time, you can take that information and really build a better social graph of your consumer base.
OK. So, Ray, are there any additional considerations leaders should be thinking about before they get started?
Yeah, we basically came up with seven steps to think about how to jump into this metaverse economy. I think the first one is a very essential one. Think about your overall brand strategy. And it sounds kind of funky, but you do have to think about that because that guides your experiences, guides the context of how you want to enter the metaverse economy. So if you're high end, high touch, super premium brand, you're going to actually be a little bit different than if you're super efficient and high volume. And so you just have to think about that. The second one is lots of use cases. There are at least 400. And Sergio is definitely correct. Narrow down the ones that make sense for you, but start with something. Start with a use case, get going. And then, of course, think about what are your desired business outcomes? Is this really about just brand building, trying to get outreach, trying to get some recognition for being in the metaverse? Or are you really trying to create a brand new operating model, a brand new set of experiences or a brand new set of products and offerings? I mean, if you're creating new sets of digital assets that you want to reach to people or you're trying to create opportunities, as Sergio was saying, to improve deposits, or maybe you're just starting with a wallet because you want to go disrupt your competitors to aggregate services on top. Just figure out the business outcomes and get those pretty clear. And then from there, you really want to start thinking about how do you build reusable digital assets? We're going to be in a way for you're going to actually have to create something for multiple platforms for quite some time. Just like in social networks, we have multiple platforms. We have to get stuff out there. But that's one of the strategies. And then, of course, we have to go back and think about our experience strategy and our engagement strategy. Where do you want automation? Where do you want more human touch? What do you want to design for friction, reduce friction? What do you want to create those opportunities on that experience design? And then, of course, building behavioral models that are behind that. And that's where we then get excited, right? We can apply analytics, automation and AI at scale. Because if I'm going to serve up a next best action, right, I'm going to know. Like, you're super excited. We're going to give you something else. Oh, you're really tired or you look like you're unhappy with something. Well, we're going to go fix that, right? And so your ability to actually think about how to apply this at the analytics and the automation AI at scale, that's going to build your capabilities on the back end. And of course, we're going to use those insights later to create these digital networks and be able to connect all these different systems. So we're going to see this as kind of another launching pad to transform people's digital initiatives, but more importantly, transform that Web 2, Web 3, 2D, 3D experience.
Thank you. Thank you. So, you know, Vlad, perhaps you could walk us through some of the potential disconnects between, you know, leadership and their vision and then, you know, the engineering teams are actually being asked to, like, build and execute against these solutions.
Sure. And it's a really good question. And I think that falls under the standard expectations versus reality. Right. Because and we all know it's very publicly scrutinized company meta, formerly Facebook, for their meta horizon. Right. It's they're being scrutinized for how characters look. But and it's easy to hate on them. But, you know, a lot of people do not have really is being the headwind is just regulatory lack of clarity. Similar to what I just said about people applying the framework of, you know, monkey JPEGs being worth hundreds of thousands of dollars, that's all there's to NFTs. A lot of regulators, you know, don't really understand that the technology that can help de-risk the industry by, you know, taking leverage loans for 45 days, settlement cycles to, you know, just a few minutes. The use cases go beyond, you know, what you read on the papers. And so I think the industry is trying very hard to educate the regulators, educate, you know, lawmakers. There's a lot of impetus in getting things done, getting things done right. But we definitely, you know, need more help from that side as far as, you know, really for the governing bodies to have a better understanding of how the technology works and that it's not just like a Ponzi scheme, which unfortunately, you know, that's what everybody thinks when they hear of like Bitcoin, if you're not in it, or like NFTs. But the conversations with institutionals, I mean, very, very engaged, even in this, you know, token price bear market, we continue to be very, very busy with incoming questions about tokenization use cases. I can tell you last year, the majority of our conversations with large traditional finance institutions were around, you know, offering crypto trading on the retail wallets. That's gone pretty much to zero now. It's all about tokenization, stable coins, cross-border payments, and making financial markets more efficient on the settlement side.
Great. David, do you mind if I add to it? So I talked about settlements because that's my kryptonite. So I worked on it at JP Morgan with the quorum system, and I've been following it ever since. I'm trying to get on a call with DTCC and to talk about their implementation because they've done a brief talking about the fact that they already do it decentrally, going through testing, and like LBBW in Europe is already doing that, and I'm getting on the phone with them. So I'm talking to them. So they have sorted out a lot of regulatory things, it sounds like. It's about adoption, and one other caveat that I didn't mention is competition. An example of European, right, LBBW being German, there is French competition because they have their solution now too, and they want to basically get the spotlight. And that's the issue, that instead of creating consortium and working together to create a centralized, well, in this space, it's a pun intended, I guess, but it's like figuring out a way to work together is an issue because it's still a spotlight, just like the hype of the word metaverse, the hype of the word blockchain, everyone wants to do their own. So that's the other caveat. It's not just regulatory compliance, it's also who gets the spotlight when they get it done.
Yeah, and I understand that, but to me, it's really not even about crypto, it's really about changing the settlement from, I mean, you could use stable coins and have that backed by fiat, you're talking about bonds, you're talking about, these are securities that are already listed and are already regulated by the SEC. And what you're doing is you're just changing the tenor of how they are transacted, you're not inventing anything new and you're not underpinning them by crypto. So I'm hopeful that that will evolve because I think it's gonna unlock a lot of enterprise value for all these, certainly for all the capital markets players. Just one other quick question for you, Ray, or for the panel, what's your thoughts on interoperability in regards to what I'll call this FS ecosystem? And the reason I call it an FS ecosystem is because I can't think about it as just banks or asset managers, maybe you look at what enterprises like Walmart are starting to do and other sort of non-traditional FS players, Google or Apple, where they seem to want to subtly in the background capture consumers' assets within their enterprise, not so much about, and then it's like, okay, you wanna pay for something, it really comes down to this idea of a product and a service, and you're doing a transaction of a product and service for exchange of value, and whether that be crypto, whether it be fiat, and then how does that interact with the grander ecosystem? I'm just curious if the three of you had a view on that.
Yeah, no, I think what's actually happening is if you own identity and you have a really large network, you're not gonna give up the revenue capture, and that's really what's going on at Apple. I mean, if you look at what they did, it was pretty intelligent. They put up a strong privacy message and privacy offering, and in return, people trust them, and so their transactions, people are doing their transactions on Apple Pay, people are doing their transactions in the store, in the marketplace, merchants are using them for the transaction gateways indirectly. I mean, they're using someone else as a third party. We all know who, I won't say who, but that's the point. I mean, they wanna be part of that conversation because they wanna get the capture on the transaction data, right? And so we're gonna see that, and you're also gonna see that in cross-border and unbanked services. People are gonna create payment services along the way with reducing intermediaries and reducing settlement times back to what you were talking about, and it really comes back to owning identity and trust. Once you have that, I can do automated loan processing and lending if I have to. I can change the way trade finance works. I can process payments differently, and then, of course, I can get to the digital assets, right? So all these things are starting to be part of not only the DeFi equation, but also what the larger metaverse economy is gonna be running on. I mean, a quick way to do this is, not that you should do this, but if you look at how the dark web works, it's super efficient, and you can learn a lot from that, and we're seeing a lot of those techniques now actually blend over into our lives.
Yeah, I think also to add there, I mean, I just spent a few days last week in Bogota, Colombia at the Ethereum Developers Conference. Had 6,000 people from over 110 countries around the world coming together to work towards improving Ethereum, which is a global computer pretty much. And the three main areas of interest right now in the developer community is identity, scalability, and privacy. So I think once we get those on board, once we figure out those things, and it's a multi-year project, but you'll be able to have, you won't need private blockchains because you'll have the privacy of zero-knowledge proofs and roll-ups, and be able to integrate all that, as well as be able to take your identity from one place to the other, and be able to service a billion people, which currently we don't have those capabilities on the public blockchains. And so the fact that you have these teams and a lot of funding out there building and really trying to scale blockchain, I think is very promising. And so another invitation for folks on the call to get engaged with the developer community, really kind of like see what's coming down the pipeline, and really that will help you think about the next two, five, 10 years. But it's an awesome space.
Very cool. One last question for Ray, and then I promise, Nicole, I know there's Q&A. Do you see public companies becoming DAOs at some point?
I see DAOs becoming public companies in that order, and I see public companies creating DAOs for subsidiaries to get into the marketplace. Because I think it's a great way to bring the community together, not just the creator ecosystem, but the investors, a new class of investors that are popping up, and also the ability to actually activate movements, right? DAOs are probably, just think of it as the biggest GoFundMe page for something, right? With membership rules, with governance, with a community of active members on the backend, right? Hopefully they don't get really granular in terms of how decisions are being made, like what color is our font, right? You want to get to a point where we're making big decisions, and you earn the right to be able to make decisions based on your contributions, and I think that's really the beauty of how DAOs will form.
May I add a thought, because I'm actually working on a DAO with one public company, which again, I cannot disclose, but the way they're approaching it is it's a big company that took a part of their business and they turned that into a DAO. So instead of putting it on the entire company, they're experimenting, see how that's going to go, and from there, expand further into other departments in their firm. So it is happening slowly but surely.
And Vlad, maybe the DAO will be bigger than the other company, given the way the funding mechanism is going to work, which is really exciting.
Very cool, very cool.
Nicole, I know there's some questions. I want to make sure that we address some of the Q&A, so.
Yeah, no, absolutely. So first question comes from Steve Boswell. So people talk a lot about how identity in the metaverse will help to change banking. Can someone in layman's terms explain what that really means?
So since I did a bit of that talk already, I'll try to answer it. So the difference in the identity in the metaverse or much rather Web3 is the concept that all of us, I think, mentioned is the zero-knowledge proofs. It's a big leap forward, something that was not possible before. And I know some financial institutions are already interested in it where you have subsidiaries in your business and you want to share identity without sharing all of the details. You're able to use that by zero-knowledge proofs, right? Like, is the person And just like some people really want high touch and some folks want self-service, I think that's the way to look at the metaverse, right? You might be in a jam and you want to talk to someone, you'll transform those experiences, right? But you can still pick up the phone. They can still show up in person, right? All those are going to be possible. And I think that's the way to look at that. The advisor experience might change because you might be all in the metaverse at the same time and you can actually create a new type of experience. But at the end of the day, it's trust in the relationship. If you can establish that, you'll be fine.
OK. And final question. Can you all explain how exactly the metaverse can ease trade settlement? I understand how the metaverse works and how trade settlement works, but I do not understand how the two can be connected. And this is coming from Yelena Drobik.
I think maybe people are using terms metaverse and Web3 to encompass a lot of things, right? So Web3 is the evolution of the web and you can not only read, write, but also own assets. And it's getting used for NFTs and initiatives on blockchain. And so the metaverse is this gigantic kind of idea that includes Web3, includes blockchain rails. I think the conversation we're having and Vlad's point about settlements was more about using blockchain technology, using smart contracts, where it's just code that will do the settlements for you. You don't need to call the back office at the other bank or your dealer and then send wires through Swift. It might take seven days. If you just use smart contracts, the code takes care of everything. It's a public blockchain. Anybody can say, look at it, say, okay, this is right. There's consensus on it. And then really help out the settlement cycles. But I do think maybe we use the term metaverse very, very broadly and we have to be more refined on terminology when specific use cases are involved.
Yeah, definitely agree. I think settlement is actually more quick because there's less interactions with middlemen. And I think it's the institutions and middlemen that are actually creating the challenge. But those are there for controls. So just remember that. So some of those are automated and required. And so it's figuring out which ones are necessary versus just trying to blanket cover everything.
Yeah. And I would just add that in traditional what I'll call trade-fi activities, whether you're talking about fixed income or leveraged loans, and I know we talked about equities, but Ray mentioned equities, DTCC, DTC is really a middle person within what could easily be a peer-to-peer transaction or an institution-to-institution transaction. And that's the way we should think about settlements for any security for that matter. If you're going to trade, if Morgan Stanley is going to trade a bond with Goldman Sachs, they can do that on the blockchain and they can transfer the security for a store of payment. And then it's recorded on the blockchain as opposed to being in somebody's books. This is no different than just straight ledger transfer.
If I may, David, one interesting point about that. And again, another one of my milestones was Quorum, the private chain developed by JP Morgan, had to be sold to ConsenSys, a blockchain company, because trust. Why would I go on JP Morgan's chain? I will just build my own. And that creates that issue where the banks would have to decide that, yes, that's why DTCC, yes, it's a middleman, but it's potentially the one that can bring them together instead of each one trying to create their own. I think that's potentially the issue. It's not about technology. It's about working together. And as I mentioned, like Germany and France, here you go, a simple example. They were part of the consortium, but they'd said, nope, we have our own.
Well, I wanted to thank everyone for taking the time today, listening to this really engaging conversation. As you can see, there's so much to discuss on this subject. We will be sending an email out to all of our participants. So if you have any further questions for any of our panelists or for anyone here at Publicis Sapient, you can reply where we can continue that conversation. I would like to personally thank you, Ray, Sergio, and Vlad for your time today, as well as David. And on behalf of Publicis Sapient, thanks once more to our audience, and we hope to see you all at future events. Thank you.
Thank you all. Thanks to the panel. It was amazing. Amazing discussion. Thank you.