I came across an article yesterday on GigaOm – Dreams of mobile payments lead telco to try banking – notifying us that Rogers, a Canadian mobile carrier, has filed to become a bank.
It makes sense, as we see various iterations of mobile wallets coming into existence, and carriers looking for a new revenue stream. Of course, it’s yet to be seen if ‘ease and convenience’ will be enough of an impetus for consumers to make the switch from the physical medium of paper and plastic to a virtual form that may still seem foreign or less secure.
This does bring me back to a question posed earlier this year about the potential of Facebook becoming a bank. I’m reminded of an interview we conducted for the Future of Facebook Project with JP Rangaswami, the chief scientist at salesforce.com and Venture Partner at Anthemis Group, who said:
“Facebook is the new new telco. It is the natural logical extension of what telcos were. I don’t think of it as anything more than taking the concept of what a telephone company used to be and drive it forward.”
He went on to describe what he meant by that, saying that essentially Facebook had brought the 5 basic components of a telco into a 21st century context. These components were:
1. a population of people you put in a directory
2. ways of reducing search costs by grouping people alphabetically/functionally/regionally/etc
3. a number of ways of communicating between people (1-to-1, groups, audio, mail, text)
4. ways to change details associated with those people, via updates to the raw data of what people are doing
So now you have a ‘social network’ that operates on the basic model of a telco, with the added functionality of mapping and extracting value from the social graph, and building open APIs across a developer platform to expose the graph to other services.
So where does the potential of becoming a bank come in?
As Rangaswami pointed out, we’re making the move to smart mobile devices, and we have the capacity to link the SIM card with one aspect of authentication. We have Facebook Connect. We have near field communication that enables us to transfer virtual value out into the real world. We have virtual currencies that can be implemented across any number of community contexts – local, regional, by industry, etc. And we’re not just talking about Facebook Credits or digitized money, but any number of complementary currencies used by particular groups to enable more frictionless transactions.
Facebook then also has the potential to draw in the unbanked or the underbanked around the world, where the entire infrastructure of having physical money and a place to store it can be leapfrogged in place of a virtual system and marketplace.
I still haven’t really wrapped my head around the big picture… curious to see how it will unfold and how mobile carriers are going to convince consumers they can be trusted as financial institutions.
What does this mean for banks? Do they get disintermediated?