In his second year at X, formerly Twitter, Elon Musk has set his sights on turning the platform into a diversified financial powerhouse, aiming to challenge traditional banks and enter the race to create a super app offering a range of financial services to its vast user base.
Musk's first year in charge was characterized by controversy, significant job cuts, and a valuation decline from $44 billion to $19 billion. However, he is determined to turn things around. In a recent company-wide town hall meeting, Musk challenged his employees to develop a suite of services that would manage users' entire financial lives, eliminating the need for a traditional bank account.
Due to regulatory constraints, X is unlikely to become a full-fledged bank. Instead, it is expected to offer a payment option, leveraging its extensive user base for streamlined verification and data management. The company aims to partner with regulated financial services providers, giving it a competitive edge in negotiations for digital financial services, lending, wealth management, and other advanced banking offerings.
Fintech experts acknowledge the challenges but believe Musk's vision is feasible. Many tech companies, including Apple, PayPal, and Meta, have successfully integrated payments to offer fee-generating financial services. However, they typically collaborate with banks and hold the necessary licenses.
X's scale is a significant advantage. Despite a slight decline in user numbers, with Statista reporting 353 million users compared to a peak of 368 million in 2022, the platform still commands a substantial user base.
Richard Crone, a payments consultant, suggests that X's "Not a Bot" project, which charges users a nominal fee for human verification, could enhance its financial services. This project is currently being tested in the Philippines and New Zealand. Crone believes this authentication system could pave the way for features like P2P transfers, bitcoin integration, and other integrated financial services.
While Musk's town hall announcement may be viewed as internal brainstorming, he boldly stated that it would "blow his mind" if a comprehensive suite of financial services wasn't launched by 2024.
Musk, a co-founder of PayPal, has a long history in the financial technology space. He criticized PayPal for not expanding into broader financial services, a vision he had back in his X.com days. If successful, X could become a formidable competitor to PayPal's dominance in the fintech arena.
However, challenges lie ahead. X will need to navigate regulatory hurdles and collaborate with fully regulated banks to achieve its ambitious goal. Additionally, competition is fierce, and X lacks the scale of industry giants like Meta and Google. Despite these obstacles, Musk's bold vision for X's financial future is poised to disrupt the traditional banking landscape.