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Facebook Bank: Five Reasons Banks Will Compete with Facebook Sooner Than You Think

Facebook is looking to be the hub for consumers in every way

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  • Written by  Banking Exchange staff
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Facebook Bank: Five Reasons Banks Will Compete with Facebook Sooner Than You Think

Facebook is not launching Libra just to diversify its business model into cryptocurrency. It is looking to be the hub for consumers in every way, particularly when it comes to investing, buying and lending. Here is just a quick list of how and why the average bank will compete with Facebook and other social networks that dominate people’s time sooner than you think.    

  1. Payments: Facebook has stated that one goal is to help facilitate payments across the developing world and across borders throughout the world.

  2. Data: So much is written about “banking the unbanked” and Facebook is stating that that is part of the initiative. But the truth is Facebook will know even more about the world’s consumers, and that is better than gold. Facebook already controls data and now add currency transactions and the database of information will be extraordinary.

  3. Blockchain Validation: The reason why Bitcoin went up instead of down with the announcement by Facebook joining the cryptocurrency market is because their entrance validates the technology and how the currency can already be used across borders. Facebook’s new currency is not so much a competitor with Bitcoin due to regulation, but it can be a disrupter when it comes to financial transactions and how they are executed.

  4. Loans and Credit Cards: Now that Facebook will not only know what you like to look at and what you like to buy, they will gather more and more data regarding your credit worthiness and your spending habits. Not only are they creating money, they are building the strength to make money the way many banks do: Loans, AUM and Credit Cards. Remember that as banks are transitioning to new technology systems for compliance, fraud prevention, speed and online banking services Facebook in many ways is already there.

  5. Interface: Banks are constantly looking to build systems and communication that interact with customers online. Midsize banks are looking to keep pace with large banks through the right fintech partnerships that help create a solid user experience. Facebook is the master of user experience.

Facebook has a long way to go before people start applying for loans or people trade over a Facebook system, but controlling currency and transactions is a major indication of what market share Facebook is really going after in the long term, and it is certainly is not just internet advertising dollars.   

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