Facebook to become THE non-bank bank
In March 2015, Level39, Europe’s largest accelerator space for financial, retail, cyber security and future city technologies based at Canary Wharf in London, celebrated its second birthday, offering an opportunity to take what we’ve learned over the past two years and look forward to the future of fintech. Several predictions were made; here’s one of the more tantalizing…
More than any other social media platform, Facebook is the custodian of the narrative of our lives. While the ongoing debate on privacy rages one fact remains: Facebook knows things about us that no other company does. Ergo, they are in an unrivalled position to offer financial services products to us because they can evaluate demand, risk, and potentially character, in a richer, deeper way than has ever been possible previously.
Unlike the traditional credit rating houses, Facebook’s trove of personal insight adds more layers to risk assessment than conventional trawls though legacy data, transactional histories, and the electoral roll. Therefore, it moves the process from a largely one-dimensional, numerical footing onto an altogether more behavioural and thematic dimension.
A key contributor to the financial crisis was the poor lending positions of mortgage companies. If those lenders had an additional signal, such as a simple traffic light system based on a life-narrative based profile and only lent to the ‘greens’ and ‘ambers’, might their mortgage-backed securities have been more secure?
The extent of Facebook’s ambitions in financial services is not clear, although we know of some early collaborations, like 2012’sCommBank Kaching for Facebook, a service from the Commonwealth Bank of Australia which gave the country’s 12 million Facebook users the opportunity to bank without leaving their social media platform. If handled well, and with beautiful transparency, a serious move into financial services could utterly delight their community.
Two weeks after the release of this initial prediction, Facebook made an important step in the predicted direction with the launch of Facebook Pay.
Editors Notes: This entry has been submitted to the FINTECH Book, the world’s 1st globally crowd-sourced book on FINTECH. Readers that enjoyed this initial abstract are invited to share and like it so that it may be featured in a longer version.