Saturday, 2 May 2020

WeChat is the route to Facebook Bank

Facebook wants a stake in the world financial system. It has 2 billion users and wants to be a bank.

Despite global concerns over Facebook's role in destabilising democracy through facilitating fake news, lies, misleading claims and pumping out unchecked ads it wants to be your bank.

Last year it announced plans for Libra, a cryptocurrency. Cryptocurrencies are digital currencies that allow fast transfer of value. Typically they are based on a blockchain to record ownership of value. The blockchain being a giant global spreadsheet documenting digital transfers. It works similarly to banks keeping a digital record of how much money is in your account. However, the blockchain is designed to be an unalterable record of transactions. For more detail there are many videos on YouTube and other places. Suffice to say the idea is that Libra will be a way Facebook users will be able to pay for goods or services without involving a bank. In some parts of the world millions of people don't even have a bank account and are excluded from the sort of financial management most people in the developed world use every day.

Facebook also own WhatsApp and Instagram. So they will also be on the radar for using Libra.

Unsurprisingly the idea that 2 billion people might use Facebook instead of banks has caused the banking system some anxiety. Facebook has disrupted the news business, organising social events, messaging and much more. It could potentially have the same impact on banking.

The way this could work is the way it works in China.



In China a cashless society is in progress. Many Chinese were already unbanked with no access to credit or debit cards. The chat app WeChat, along with AliPay, are social media experiences that include payment, shopping and food delivery.

If the Chinese companies behind WeChat and AliPay actually entered western markets with the same services then China could dominate international digital transactions.

Facebook want to be a global bank and centre for shopping. The Chinese seem to already be doing it and it could come to an app near you soon.


No comments:

Post a comment