It finally happened! Facebook is officially moving into finance. The social network applied to the Irish authorities for a license that would allow it to get into the money transfer business.
For financial institutions this is certainly a 'barbarians at the gate moment' because they probably didn’t see this coming so soon (if they saw it at all).
This move totally makes sense because people love their phones and social networks more than they will ever love their financial service providers.
The big picture could be far more interesting. The World Bank just reported that by 2016, global remittances will be a $516 billion market. So, if you consider:
A) A big part of the attraction of social networks is for people in different corners of the world to keep in touch
B) The strongest growth of social media platforms takes place in emerging markets
A + B means that we may have the 'killer app' to send money via the same channel people already use to keep in touch.
Furthermore, while emerging market banks struggle to get people to open bank accounts, in Africa we have already seen that when you put finance into mobile phones, more people get involved in finance.
No matter how you look at it, of the 7 billion people on earth, 5 billion live in the emerging countries of Africa and Asia so this is not about the West but rather about the future of the world's social order.
Another thought is that financial transactions could surpass advertising as the main revenue source for social networks. If this is the case, the era of 'Social Finance' will have begun for real.
Going back to Africa: in today's Kenya, mobile phone banking is a very common thing. In fact, it is such a great system that it is now being implemented all over Africa. And because banking penetration remains low in those places, social networks stand a good chance of becoming the norm as the personal finance infrastructure.
if we take it from history, when barbarians show up at the gate, they usually wind up taking over...