What is Web3.0?

A data-rich, AI driven internet that understands human language and employs machine-learning to analyse data and user needs with the goal of providing a more intelligent, predictive and connected experience for users. 

The Web 3.0 vision of the internet is a decentralised permissionless public network based upon distributed ledger technology.  Unlike Web2.0 where banks and companies like Google, Apple or Facebook controlled data and interactions in a centralised model, this future web will allow users to own and control their identity and data.  Web3.0 will be the host of an economy of tokenised assets and services and,  users will be free to interact in this ecosystem and utilise smart contracts to automate services.

Why the interest?

The potential transformation of Financial Services that Web3.0 could drive is profound.  For the evangelists, Web3.0 and Blockchain technology will deliver a fully decentralised financial infrastructure where individuals will own and control their identity and data, and assets and liabilities will be fully tokenised.  In this version of the future, individuals will be able to interact peer to peer without the involvement of centralised control, banks, or governments.  An AI human language interface with the web will provide predictive humanised interaction and a high level of automation and self-execution.

Just as Siri and Alexa have changed the way we interact with the big technology companies, Web3.0 search capabilities promise to take our interactions to another level and have the ability to execute on our requests automatically.

For example: you could ask the decentralised Siri of the future to find you the best return for your savings.  The Future Siri would be able to search the market for the best offers, check suitability against your risk profile and market access qualifications and make recommendations to optimise your returns.  If you approve the alternatives offered, it would be able to access your accounts and execute the trades automatically.

Will it be impactful?

The vision of Web3.0 is promising however the reality of execution is likely to fall short of this vision.  For anyone observing the current direction on regulatory oversight in the crypto asset space and financial services in general a fully decentralised peer to peer network is likely to require an extended period of heightened supervision before, if ever, reaching the potential envisaged.

Reviewing the recent Lummis Gillibrand Responsible Financial Innovation Bill and similar proposed legislation around the globe, the indication is that the market will go through an extended period of increased regulation and oversight.  Governments and Regulators appear concerned about three key themes:

    ·       Consumer protections and suitability

    ·       Protecting tax revenues

    ·       Preventing money laundering and terrorist financing

Despite the rising regulatory barometer Web3.0 is still likely to drive significant change across Financial Services.  The idea of customer service is likely to be dramatically different as Web3.0 adoption starts to grow, with early Web3.0 adopters moving into an interactive and intelligent self-service model, where client have more control and are able to utilise automated process flows to switch accounts and products seamlessly.  This has implications for providers including the bank capital and liquidity. Slower adopters and those who fail to respond are likely to see material impact to their business.  

Financial Service Providers will need to have determined their relationship with customers in this new world, including,  how to provide services for identity management, on-chain wallets and, digital custody or risk being left behind.