As Facebook continues its roll towards 1 billion served, attentions are focused on its next move.
Already close to surpassing Google in both volume of hits and time spent online, and holding arguably the best customer insights of any online provider, it’s safe to say social networking is not the be all and end all of Facebook’s offerings.
So what do you do when you’ve got the world’s biggest, most interconnected platform? You start making some money off it.
The author discusses how speed of innovation and shortening of time to adoption are the key drivers in disruptive change for the industry; where it took 28 years for magnetic stripe ATM cards to reach 100 million users, it took Facebook less than 5 to reach the same milestone.
This was back in 2008. Now, two years later, that number is closer to 500 million.
So how does Facebook capitalise on this massive audience?
This interconnectedness provides the ideal platform for a micropayment challenger.
Facebook members will be able to link up a credit card or existing bank account and transfer money to anyone already authenticated through Facebook’s security.
This will be quicker and easier than anything currently available via the banks or traditional micropayment king Paypal. No BSB’s to remember, and no need to worry which provider they use; if they’re in your friends list, they can receive the cash. Simple as that.
Following this, Facebook will look at ways to hold onto your money for longer.
Why transfer it into a third party account when you can keep the funds in Facebook and enjoy the social aspects to saving. SmartyPig has been doing this for a while, to great success, allowing users to share savings goals and progress with friends.
By leaving all your funds in the Facebook bank platform, all transactions will be processed in real time, accross banking systems not encumbered by dated COBOL legacy code.
As a client you’ll have access to the full range of – undoubtably market-leading – online and mobile capabilities (think budgeting/financial management tools, as well as the traditional internet banking stuff), and Facebook will open up incentives based on balance you hold (first access to Groupon offers for those with a $2000 or higher balance). The platform’s cross-sale and incentive capability will be beyond any traditional bank’s wildest dreams.
Facebook bank won’t attempt traditional deposit taking and loan making. Instead it will make its profits by skimming a margin off all transactions. It will be a banking facilitator, not an intermediator.
Micropayments will then give way to peer-to-peer lending.
Zopa in the UK has shown that this approach to investing and borrowing can not only be less risky that dealing with a bank, but generate a better offer for both parties. In this enviroment, it’s only the banks lose out in the end.
Facebook users already spend the majority of their online day using this platform. They trust Facebook with seemingly limitless personal data, ranging from baby photos to records of everywhere they’ve eaten in the last week.
On the other hand, traditional banks consistently rate lowest in customer satisification. Their branches are redundant to the majority of Gen Y users, and their online (direct) offerings are light years behind the truly innovation service offerings of Google, Facebook or Paypal.
With adoption rates for new innovation reaching critical mass, it won’t take much to transform Facebook into the largest consumer-led financial service organisation in the world.
…and I haven’t even touched on Facebook credits yet!
I’ll leave you with the video that inspired this post: The Bank of Facebook – social marketing insights from Thomas Power: