The Taiwan Banker

A front-page article in the Financial Times in late April made waves, describing a rate cut at the “Bank of Nook.” This bank is built in the anthropomorphic animal village of Animal Crossing, in a space called the meta-universe. Tens of millions of players interact in different villages every day, and also conduct transactions such as deposits, loans, and exchanges in this raccoon bank to create the best gaming experience. It was the lockdowns which brought so many new players to this virtual space. Therefore, commentators and experts heatedly discussed whether real quantitative easing should also spread to this social simulation created by Nintendo. How should virtual spaces welcome negative rates? This is a typical post-pandemic scenario of financial extension. As people use the internet ever more frequently, in addition to the original data collection, daily life will include more remote work and education, food delivery orders, and online payments and transfers. These online activities also rely heavily on fintech. The ABCD of fintech - artificial intelligence, blockchain, cloud computing, and big data analysis – will give financial services a colorful new look. Decentralized Finance (DeFi), for instance, will become a new area of finance. Based on a blockchain layer, start-ups have developed a variety of initial coin offerings (ICOs) and security token offerings (STOs), as well as non-fungible tokens (NFTs) and a variety of other innovations. One could say that a brand-new Wall Street already exists in virtual space, providing social match-making in another space to meet financial services needs in the virtual world. However, this trend has already brought great unknowns to financial supervisors around the world. After all, the financial industry inherently requires a certain degree of franchise supervision. Existing laws and regulations are structured in the framework of physical services. Thus, the rise of virtual financial services has created numerous regulatory blind spots. A salesperson needs a personal license to sell insurance, for instance. It can be expected that AI insurance sales programs or insurance bots will soon be created for personal insurance, resolving gaps and pain points without the need for professional licenses. How should the abilities of these virtual practitioners be evaluated, and how should penalties and liability be imposed when disputes occur? Existing financial institutions are already working to find countermeasures. Many traditional financial institutions have entered into next-generation financial services. Citi, Goldman Sachs, and Morgan Stanley have established digital asset investment teams to assist their high net-worth customers to invest in digital assets such as ICOs, STOs, and NFTs. They have also used blockchain technology to develop credit certification, and even participate in investment and issuance of stablecoins. The traditional financial industry does not want to give up on future business opportunities developed in virtual space. Thus, due to changes in lifestyle in the post-pandemic era, financial services may be further replaced by integrated real and virtual services, formed by crowdsourcing – which means that physical financial services may eventually move online. Virtual services will be the largest and most important type of services. Therefore, financial institutions can now start considering how to maintain their business in virtual space. With the development of cloud computing, can you imagine banking in the cloud?