Facebook’s Libra set out to transform cross border payments, but died in the hands of regulators. Giants like Amazon and Google have attempted alliances with large banks that have not cracked the code in linking financial services to digital powerhouses.
It is Elon Musk’s turn through Twitter to enter into the financial services sector, but do not count him out. He is a risk taker, but has also had the patience to bring about dramatic change over a long period of time. It may be the difference, as Musk has been able to innovate beyond the digital universe.
Musk also first hit it big as a founder of PayPal. The biggest undoing of these also rans were compliance, something that Musk has had to contend with in his previous ventures.
It is not clear how far “X” will go in the fintech world, but Linda Yaccarino the company’s CEO has stated that payments and overall banking will be part of its future business model backing up Musk’s original vision when he bought twitter. He even spoke at the time of lending capabilities coming in a very short time. It was his initial payout of $180 million plus from PayPal that helped him to launch Tesla, which helped him to buy Twitter.
One of the biggest challenges, however, goes beyond just compliance and regulation. One question will be can Musk and Twitter overcome consumer hesitancy to trust an unrelated brand with financial transactions.
Banks have greater loyalty and trust than almost any technology company. It would be Musk’s greatest triumph yet if he can manage to win consumers and lawmakers, but sometimes first mover advantage is not an advantage at all. It may be good timing on his part, even if the original acquisition of Twitter made the world’s richest man a lot poorer.
Consumer belief, overcoming compliance hurdles, and finally the right banking partners could yield success over the next few years.
Musk said that when he started Tesla that he thought “it probably would not work.” He could be wrong again….