Earlier this week Bank Systems & Technology reported that Facebook has applied for a remittance license in Ireland. Bryan Yurcan writes, “According to reports, the popular social network is seeking to allow its users in Ireland to store money on the site and have the ability to send it to other users or pay for products.”
I expect this is a trial balloon by the social media giant to see just how far they can push the idea of social payments. “Clearly,” suggests Yurcan, “between their partnership with RBC [a Canadian money transfer service available on Facebook in Canada] and this most recent announcement, Facebook is taking the idea of social payments seriously. And with a whole generation of consumers who have grown up with social media as an extension of themselves, that might be a good idea.”
Ireland is just the first step. It probably won’t be too long before we see other EU countries follow suit. And then, the U.S.?
What other banking services could social media and online powerhouse companies like Facebook offer? Small business loans?
That’s not such a far-fetched idea. Amazon offers small business financing for the merchants on their platform. Of course the proceeds from the loans must be used to strengthen the inventory available through the Amazon channel, but it’s helped many small business owners increase their business and expand their presence on Amazon. Facebook and Amazon see gazillions of daily users, and in Amazon’s case, process millions of transactions every day. Why not jump into financial services? Their users trust them (for the most part) and they certainly have the capital and the network to make a real dent in the market—not to mention the income it would create.
Over the last several months the industry press has talked a lot about how community banks need to figure out the best way to compete with big banks. I agree, but I’m not convinced big banks are the biggest competition for community banks. I do think ignoring organizations like Amazon, Facebook, and other non-bank companies offering financial services have the potential to make community banks less and less relevant.
The market is ripe for the banker most willing to look to a new paradigm for providing services from deposits to small business loans. It’s a shame it feels like most of the innovation is coming from outside the industry. Is your bank going to innovate or become irrelevant?