According to a report, mobile commerce is estimated to reach $278.9 billion by 2018. With this increase, there comes a shift in the way we make payments across the globe. There will be an estimated 2.55 billion users of social networks by 2017 according to a report by eMarketer. It would be an understatement to say that social media will play a major role in the future of payments. The data collected through these social media platforms have the ability of analyzing consumer behavior and preferences, which is the most important factor for analysis for the FinTech companies.
Social media offers a host of benefits to the lending sectors and it brings tangible opportunities to the lenders. As credit underwritings evolve and while credit standards advance with the economic cycles, the credit underwriting process largely remains the same. While factors such as salary, job history and credit score servings would remain the core of credit decisions, the array of data with the potential to provide accurate risk scoring and better evaluation is available using social media. The innovative lenders are incorporating social media data into the credit underwriting process. Lenders that are taking advantage of the data generated by social media are able to differentiate themselves with enhanced credit lending process and customized service offerings. Online retail P2P lenders such as Lending Club, Prosper, and small businesses have used online and social media as their core marketing channels. Social media marketing has become an important component of brand marketing of companies.
Financial institutions have also starting to recognize the opportunities provided by social media in catering today’s generation. With the ever-evolving payments landscape, it has become imperative for banks to offer services that cater to the changing channels of interaction, especially social media, even in the realm of payments. As a result, banks such as Kotak (India), Barclays (UK), Rakuten Bank (Japan) have opened their doors to new online payments via Facebook and Twitter.
Platforms such as Dwolla, Fastacash, Azimo and Wrapp have also enabled gifting, giving or transfer of money to friends and relatives via social media. Networking platforms such as Twitter and Facebook have also entered the space. Facebook’s peer-to-peer payment feature enables friends to exchange money via the Messenger app whereas Twitter has rolled out product and place pages that allow users to discover and purchase items within the service.
On the other hand, some products in FinTech are itself built on social media. Venmo, a mobile payment app has added its own social media component by integrating with bigger platforms. Venmo’s business model which integrates payments with social media sets it apart from competitors in the e-payment space. The service is used to share payment data on a social platform in a similar manner to how people share photos and news on Twitter. If a consumer wants to pay back a friend for dinner or such, he is required to open the Venmo app, select the appropriate contact from his list of friends, add the dollar amount and send. Before the transaction is completed, Venmo prompts the user to ask what the payment is for – users could write “Dinner at Domino’s” or “Coffee at Starbucks.” These annotations are public by default. They are visible to those involved in the transaction as well as the user’s friends on Venmo.