Meta Platforms – Mark of intent.

Meta hasn’t given up on Fintech

• Meta’s purchase of trademarks is a clear sign that it has not given up on financial services, but the vested interests and central banks will do everything they can to prevent Meta from making any headway.
• The story of Meta’s cryptocurrency, Libra (now Diem), is a tale of woe.
• What began as a great idea was watered down through withering pressure into something that no longer challenged the current banking system and fiat currencies.
• This has been exacerbated by the exit of Diem’s creator David Marcus who stated that he wants to return to the start-up world.
• I think that this is Silicon Valley speak for “the outlook for Diem is so compromised that I don’t want to do this anymore”.
• This combined with all of the bad press would lead one to think that Meta is just going to give up on financial services, but this is clearly not the case.
• The company is spending $60m to acquire the worldwide rights to the trademark assets held by Meta Financial Group, a regional US bank.
• This is a signal that Meta intends to be more in financial services than just a currency and that these services will be offered under the acquired trademarks.
• This will undoubtedly be met with a great outcry about how Meta cannot be trusted with financial services data, but I think that the reality is that Meta in financial services scares the existing banking sector rigid.
• This is because the banking system as it exists today is not fit for purpose.
• Despite massive consumer digitisation, it is still slow, overly bureaucratic, expensive, and cumbersome to send money through the global banking system.
• Transactions that should already be frictionless and instantaneous are often taxed by multiple handlers and take days to complete.
• This is an industry that is more ripe for disruption than any other and yet all attempts to force it to modernise have failed.
• Facebook’s Libra / Diem project was the latest attempt to fail, and I continue to think that this one still has the potential to offer consumers decent financial services.
• This is because it has already built a massive global network of users who use its chat and social networking systems meaning that financial services could relatively easily be layered on top.
• This is exactly what Ant Group and Tencent have done with great success.
• This threatens to create an independent financial network that would compete very effectively on quality and cost against the existing system which would force it to shape up or shut down.
• Given the right protections for consumers, I think that Libra could have been extremely successful but clearly, the banks and payment companies see this as an existential threat.
• This, I suspect, was the main reason why there was so much horror and dismay from politicians and regulators when Diem originally launched.
• Following what must have been serious heat from banks and politicians, all of the really key players have pulled their backing from Diem, leaving it floundering.
• Meta is clearly down but it obviously intends to have another go at financial services.
• It is very unclear what form these might take but the testing of WhatsApp payments in India is an indication of where this might start.
• The migration of payments into financial services as executed by Ant Group and Tencent is also an indication of where it might go.
• However, this assumes that there is no further regulatory predation which looks almost inevitable to cause more problems.
• Hence, I continue to see a long hard struggle ahead for Meta to make any headway at all in financial services meaning that this will not become a meaningful part of its businesses for many years.
• I remain pretty ambivalent to Meta as it has fallen a long way but I can’t see a catalyst on the horizon that will cause it to turn.