Billionaire Elon Musk’s grand vision is to turn Twitter into a one-stop shop for financial services. It’s hardly the first time a tech giant has sought to muscle in on Jamie Dimon’s turf.
The landscape is filled with technology firms that aimed to do the same thing: Facebook spent years investing in a project called Libra that was supposed to revolutionize cross-border payments, but regulatory scrutiny forced it to abandon the project. Google planned a digital financial offering and even lined up 11 banks as partners for the launch before it suddenly nixed the entire plan. And Amazon.com Inc. considered offering checking accounts for consumers, but that project never became a reality.
US tech companies have struggled in their attempts to take on banking behemoths, often scaling back their ambitions in the face of competition and protracted approval processes. But Musk isn’t like other tech executives: his business decisions don’t tend to follow predictable paths — as evidenced by his many shocking moves at Twitter, including abandoning its iconic bird-based brand for the letter X — and he does have experience in financial technology, having founded the firm now known as PayPal Holdings Inc.
“I’m not saying at all that he can’t do it,” Pranav Sood, executive general manager at cross-border payments platform Airwallex. “But it’s something that takes time and it’s something that takes investment because you have to make sure that you do things right in order to stay compliant globally.”
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Musk’s envisioned X app — which will connect Twitter’s underlying infrastructure with X.com, a web address that now functions as a routing service to Twitter — is one that layers communication, multimedia and “the ability to conduct your entire financial world.”
In messages posted in support of Musk’s overhaul, Twitter Chief Executive Officer Linda Yaccarino said X would include fintech features such as payments and banking. Twitter has already snagged money-transmitter licenses in four US states — Arizona, Michigan, Missouri and New Hampshire.
It was a vision Musk had tweeted himself in 2022 during his acquisition of the social-media site. His musings indicated he wanted Twitter to be more like Tencent Holdings Ltd.’s WeChat, a messaging service turned super-app used daily by more than a billion people in China. It’s also a fintech titan that allows users to send each other funds, pay for goods and services, and even borrow money.
It wouldn’t be Musk’s first foray into payments. He moved to Silicon Valley during the dot-com boom, and founded a company — also once known as X.com — that eventually became PayPal. He made his first fortune when PayPal was sold to eBay Inc. As for banking, Musk has said he turned down “several high-paid jobs on Wall Street” to focus on technology — a decision that’s worked out well for Musk, now the world’s richest person, with a net worth of $238.9 billion, according to the Bloomberg Billionaires Index.
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But baking in banking and payments features will require users to get comfortable with a company with a brand-new product name and its own set of financial woes after Musk saddled Twitter with high-cost debt.
WeChat, Alipay
Tech platforms around the world are looking for ways to better monetize their existing customer bases and product offerings, and have long sought the routine, loyal engagement consumers have with their banks and other financial-services providers. Plus, they’d love to replicate the traction that players such as WeChat and Ant Group Co.’s Alipay have gained in China.
In recent years, US tech companies have invested in beefing up their payments and financial-services capabilities. In some cases, though, their progress has been stunted by push-back from lawmakers and regulators.
Meta Platforms Inc.’s Facebook debuted the Libra Association in 2019. The idea was that the company and its partners could use stablecoins to make it cheaper and easier to offer remittances to consumers. Almost immediately, politicians and regulators around the world called on Facebook to halt the project and key partners including Mastercard Inc. and Visa Inc. abandoned the association within months.
Alphabet Inc.’s Google has tried — and struggled — to become a primary medium of commerce in the US, despite relative overseas success in countries such as India. Last year, the company shelved plans to add bank accounts to its payment app after it had tied up partners including Citigroup Inc. for months on the work.
And Amazon held early talks in 2018 with banks such as Dimon’s JPMorgan Chase & Co. and Capital One Financial Corp. to offer checking accounts, but that never resulted in any products.
Ambitions Abandoned
Even Musk’s former company has sought to become a WeChat-style super-app. Two years ago, when PayPal was was worth more than Citigroup and Goldman Sachs Group Inc. combined, the company plotted an ambitious foray into new areas including stock trading and high-yield savings accounts as the firm sought to go beyond its roots as an iconic checkout button.
But, more recently, after the company’s stock was battered amid a slowdown in spending on the firm’s payments platforms, PayPal has had to abandon those ambitions. These days, Chief Executive Officer Dan Schulman is once again focused on improving the checkout button rather than turning PayPal into a one-stop shop for its customers’ financial needs.
“Our first and most important priority is continually to improve the branded checkout experience,” Schulman told investors in May. “This is at the core of what we do.”
The transition to offering financial services isn’t a straightforward one, given tough competition in the US banking market, intense regulatory scrutiny and a high level of “stickiness” among finance customers, said Jeff Tijssen, global head of fintech at consulting firm Bain & Co.
“You will therefore need to think of a very compelling value proposition that is truly differentiating in order to stand out,” he said.