According to him, JP Morgan’s decision to launch a branch in the Metaverse and the decision to hold the Australian Open tennis in the Metaverse are indications of the interest in the next wave of decentralised finance. “Decentralised finance cannot be ignored by regulation as the next-generation decentralised infrastructure is getting very close to existing payment rails with transaction speed, security and very low level of costs. Major banks around the world are not sitting and waiting for regulations to come out as they feel the new networks can help them save money,” said Pai, who is based in Melbourne.
Capgemini is presenting the developments in banking to its clients by categorising them into five zones — digitisation of processes, rethinking digital journey, their approach to open banking, the move beyond banking to superapps, and marketplaces. “The last 12 months have seen a big push towards decentralised finance. DeFi is the next big wave of finance,” said Pai.
Metaverse is a network of virtual words, while DeFi is a reference to digital finance transactions without a middleman or central authority.
“The main difference between open finance and DeFi is the sheer availability of access and how everything becomes borderless. New infrastructure is being developed by the new currencies. It does not matter whether they are cyber currencies, tokens or central banking digital currencies,” said Pai.
He added that for providers, the customer journey is in three stages. It starts with an exchange, moves to tokenisation of assets and then they talk about the safekeeping of those assets. The metaverse is bringing another new element. Banks can use this simulated infrastructure to look at the performance of the product before they are actually launched,” said Pai.
While banks could use the decentralised infrastructure to cut costs, for central banks the digital currency provides the advantage of being programmable. “There is a big use case now coming for central banks to tax that. If I use digital currency, maybe a portion of the money I pay goes directly to the central bank account,” said Pai.