The Metaverse and Environmental, Social and Governance (ESG) are among the top five innovations that Singaporean businesses believe will have an impact on their business over the next 12 months. These technologies will present both opportunities and challenges, including difficulties in obtaining relevant ESG data.
According to a study published by financial services technology firm FIS, some 82 percent of businesses say the Metaverse will have a significant or moderate impact on their business in the next year, while 84 percent believe the impact will be felt within three years.
It surveyed 160 executives in Singapore’s financial services industries (including banks and insurance companies) and non-financial services industries (including retail, travel and technology providers). The research was part of a global report that surveyed 2,000 executives in nine countries including Australia, Germany, Hong Kong, India and the UK.
Among Singaporean respondents, 81% said ESG would impact their business in the next year, while 89% said the impact would be felt within three years.
Another 81% pointed to embedded finance as a major innovation that will impact their business in the next 12 months, while 76% said the same about decentralized finance (DeFi), and 69% said . to cryptocurrency. When respondents were asked about the three-year impact, these numbers rose to 89% for ESG, 84% for embedded finance, 83% for DeFi, and 73% for crypto.
Embedded finance includes customized financial services, such as payment and investment services, that non-financial service providers provide to consumers on demand.
The study shows that Singaporean executives see both opportunities and challenges as these five technologies develop.
For example, FIS noted that some respondents are already actively researching potential opportunities in the Metaverse and see entry into the virtual space as strategically important within the next three years. However, there are concerns that content moderation and standards of conduct will act as barriers to adoption.
According to FIS, this shows that virtual environments need more control and predictability to realize the full potential of the Metaverse.
While respondents acknowledged that DeFi, which utilizes blockchain and digital asset technology to manage financial transactions, offers a significant growth opportunity, some cited poor user experience as a barrier to adoption.
Additionally, the lack of clarity in cryptocurrency regulations is cited as a major barrier to adoption.
When it comes to ESG issues, Singaporean respondents see opportunities to improve market competitiveness, and some of them have developed new ESG products and services. However, there are concerns about the difficulty in accessing and analyzing relevant ESG data and reporting data due to the lack of internal data or tools and external technologies to support ESG.
Respondents also noted that an incompatibility between their risk management framework and most digital assets would prevent them from adopting DeFi.
“Singaporean businesses have made it clear that increasing investment in key areas such as embedded finance, Web3 and ESG is critical to capturing growth opportunities,” said Kanv Pandit, Managing Director, Banking Solutions Group, Asia Pacific, FIS. “This echoes the government’s ambition to cement the city as an international hub for fintech and innovation.”