‘Ironic that the world’s big­gest so­cial net­work is it­self an­ti­so­cial’

Yorkshire Post - Business - - FRONT PAGE - Bird Love­god

Three years ago the fin­tech com­mu­nity ex­pected Facebook to launch a bank. Now it never will. Business is mostly about money, mostly about data, mostly about trust. Which of these state­ments would you most agree with?

There’s no deny­ing business has gone through a seis­mic shift in the last two decades. Un­der­ly­ing this is the emer­gence of tech­nol­o­gists as world sculpt­ing business lead­ers.

Highly in­tel­li­gent peo­ple who a gen­er­a­tion ear­lier would have prob­a­bly been aca­demics in­stead built ex­tra­or­di­nary busi­nesses, us­ing a new set of prin­ci­ples and to­tally new business mod­els.

Whilst hugely prof­itable global com­pa­nies today, Facebook and Google made no ef­fort to gen­er­ate rev­enue for years. They went for growth and mar­ket dom­i­nance with the un­der­stand­ing they would be able to make all the money in the world once they achieved it.

These com­pa­nies are them­selves tech­nolo­gies. De­ci­sions within them are made ac­cord­ing to math­e­mat­i­cal for­mu­lae. Al­go­rithms deter­mine choices. The com­pa­nies them­selves are cor­po­rate ma­chines, data driven and in­cred­i­bly de­per­son­alised. This is ap­par­ent at ev­ery level. These com­pa­nies have gone to great lengths to cre­ate a dis­tance be­tween them­selves and their users.

Even un­der such ex­ten­u­at­ing cir­cum­stances as the po­lice need­ing a Facebook ac­count pass­word to help in­ves­ti­gate the mur­der of a child, Facebook takes eva­sive ac­tion to avoid as­sist­ing. The closer a hu­man be­ing gets to them, the fur­ther they move away.

Facebook as an or­gan­i­sa­tion is so­cially in­com­pe­tent, hid­ing be­hind technology and pro­cesses rather than meet­ing any­one or any­thing face to face.

Ironic that the world’s big­gest so­cial net­work is it­self an­ti­so­cial and al­most mis­an­thropic. It treats peo­ple as data sources. The data is juiced out of them, to be sold and sold again. Never mind if it causes some of them to be­come ad­dicted. Never mind if it is in fact a colos­sal waste of time for the users, never mind what the data is used for. It has only one func­tion.

To make money. And this is why Facebook is in deep trou­ble. It lost sight of, or never ac­tu­ally con­sid­ered, the hu­man fac­tor of trust.

It was al­ways there, al­ways as­sumed, and now it’s gone, and Facebook is a frac­tion of what it could have been as a re­sult.

A few years ago in the fin­tech scene there was real ex­pec­ta­tion that Facebook would open a bank. It al­ready had the cus­tomer base, and huge data re­gard­ing the re­la­tion­ships of users, the so­cial de­mo­graphic, their jobs and in­come, spend­ing habits, in­ter­ests, and de­sires.

Facebook could have been the chal­lenger bank to rule them all. There was gen­uine ex­pectancy that it would an­nounce the launch of Facebook Fi­nan­cial Ser­vices and that would be the end of the line for the old school banks, and chal­lenger banks, and all peer to peer lenders, pay­day loan com­pa­nies, fi­nance com­pa­nies, all of it and ev­ery­thing.

Facebook was poised to take it all. It was ob­vi­ous to ev­ery­one in the room.

They had ev­ery­thing they needed. Su­pe­rior technology, seem­ingly un­lim­ited re­sources, bil­lions of dol­lars, bil­lions of cus­tomers, and the trust of those cus­tomers.

The data they hold even

en­ables them to be an ef­fec­tive credit rat­ing agency. They could have ar­ranged loans be­tween friends and topped up the dif­fer­ence.

They could have cre­ated big in­sur­ance pools be­tween user net­works and re­de­fined the in­sur­ance sec­tor.

For those of us who looked at Facebook as a fi­nan­cial ser­vices provider, it was clear and ob­vi­ous they would move into the space and own it. They even have mil­lions of business users, I mean, they had the Royal Flush, we were just wait­ing for them to lay the cards down and take the game.

In short, Facebook could have been the big­gest bank, the big­gest lender, pen­sions provider, in­surer, loan fa­cil­i­ta­tor, mort­gage provider, and de­liv­erer of ev­ery other fi­nan­cial prod­uct, in­clud­ing some they could cre­ate them­selves.

How about en­abling peo­ple to make mi­cro loans to poor farm­ers in Asia? Or en­abling moth­ers in Africa to set up lit­tle busi­nesses sup­ported by moth­ers in the UK? Any­thing. They could have done so much. Facebook is a frac­tion of what it could have been.

It’s triv­ial com­pared to the po­ten­tial it had. They could have been truly won­der­ful. But what did they do? They saw only data, more and more data, and more and more ways to mon­e­tise it. Big data be­came huge data, and they lost sight of the most im­por­tant thing.

Trust. Once you lose that, you’ve lost the game.

LOS­ING TRUST:Facebook as an or­gan­i­sa­tion is so­cially in­com­pe­tent, hid­ing be­hind technology and pro­cesses rather than meet­ing any­one or any­thing face to face.

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