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A post relating to this item from Finextra:

Could Facebook wipe out the banking industry?

15 March 2010  |  23508 views  |  5
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Social networking site Facebook has the potential to wipe out the traditional banking industry by moving agressively into peer-to-peer lending, says Thomas Power, CEO of online business network ecadem...

It's called hype for a reason

16 March 2010  |  4501 views  |  2

I love articles like this that are really only interesting for their "Hype" value. Facebook, while an impressive social networking site is far from a bank. The skills and business value of running a bank are far different from their current operations and the leap to another industry is pretty daunting.

If we look at marketplaces such as Zopa it's hard to say they are successful. With a significant operating loss and multi-year retained loss and a very low single digit marketshare of lending after a significnat number of years in the marketplace simply demonstrates how difficult it is to create a revolution in consumer finance.

Would the ROI of running a bank really be the best business case for Facebook?

Comments: (2)

Giles Andrews
Giles Andrews - Zopa - London 16 March, 2010, 10:44

Hype? I’m not sure.

 

Firstly let me declare an interest – I am cofounder and CEO of Zopa. We were the very first online peer-to-peer lender anywhere in the world and just celebrated our fifth birthday.  We lent more money last year than over the previous 4 years combined.  Whilst £70 million will sound tiny to most banks, an escalating growth rate of now well over 100% year on year will not.  

 

I think the time it has taken for us to approach scale and profitability is a function of the time it takes to build trust in a new consumer finance offering, especially for a brand new start up like Zopa. Anyway, there is no question the time is right, as Matthew Parris eloquently sets out here in the Spectator http://www.spectator.co.uk/politics/all/5831713/its-time-we-bank-customers-started-talking-to-each-other-in-the-queue.thtml

 

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Anthony Cossey
Anthony Cossey - Fixnetix ltd - London 17 March, 2010, 15:45

Given the way that applications are delivered on facebook, i think that the security concerns of users would make facebook an inappropriate choice of platform. At least ZOPA was designed from the ground up for its purpose. Facebook has a track record of being lax when dealing with users privacy, hence i think this very fact would act as a barrier for most users to use facebook for any sort of currency operations.

 

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