I ran across this clever, or ghastly if you work in the banking industry, idea from Thomas Power from Ecademy.com.
What if Facebook became a bank?
If you’re a banker, I’d bet the Bank of Walmart idea is looking pretty good about now since the Internet is steadily putting the middlemen out of business.
But think about this for a second…
If Facebook could persuade just 1 in 10 of it’s 400 million users (as of 03/15/2010) to deposit just $1000 in the Bank of Facebook, you’re talking a cool 40 Billion dollars.
Not exactly game changing when taking in the enormity of the financial industry as a whole, but certainly not chump change either.
But 40 Billion isn’t anywhere near enough to hurt the banking industry. Not by a long shot. It might get some media attention since they’ll lose the spread between checking/saving rates and mortgage rates, but it would take a capital loss much larger than 40 Billion to do any serious damage.
However, since the number of Facebook users is growing by 100%+ annually, Facebook users are more web savvy and comfortable with Internet banking, and Facebook can probably get a much better conversion rate than 10% of its users to switch to the Bank of Facebook, you’re talking about a substantial change to the status quo of the global banking system as it continues to grow and mature.
Perhaps even more progressive (or scary from your point of view), is what if some of this money was devoted to social lending (similar to Lending Club and Prosper). The need for an “old school” credit card issued by a Too Big To Fail bank is considered obsolete because you would rather share the wealth with your Facebook brethren than a group of fat cat bankers.
All you would need (in theory) is a pre-approved Facebook line of credit, with a fixed interest rate, and a group of friends (or investors) who wanted to indulge your consumerism. All they ask in return is a 10% return on their investment after paying for your stuff.
Of course, I might be in entrepreneurial dreamland expanding on Mr. Power’s idea that may or may not become a realization.
Then again, when you have an “army” of 400 Million followers/users, you can probably use, or leverage, them to do just about anything you want…
Like kill off an entire industry.
Not to be facetious, but it would be ironic if Facebook did actually move forward with this business plan considering that the 2000 to 2009 decade was the rise of Too Big To Fail, but the 2010 to 2019 decade could be known for the Too Big To Stop social media behemoths.