From Twitter to X: A Complete Metamorphosis
With his bold decision to rename Twitter as X, Elon Musk launched an ambitious effort to develop a comprehensive financial services platform. By including financial services, X is poised to transform from a social networking platform into a comprehensive “Everything App.” This audacious plan signifies a substantial change in the capabilities and functionality of the platform.
Constructing the Ultimate Financial Centre
Beyond just being a social networking platform, Elon Musk has far bigger plans for X. The ultimate objective is to develop X into a comprehensive financial platform that can handle users’ whole financial portfolios. Offering high-yield accounts, checks, loans, stocks, and quick international money transfers are all included in this—all inside the same application.
This ambitious goal is reminiscent of the first proposal for Musk’s 1999-founded online bank, X.com, which later changed its name to PayPal. Because he feels that the PayPal of today falls short of his original ambition, Musk is committed to using X to make this right.
The Difficulty of Financial Services Scaling
Building a massive financial services company is a very different kind of issue than growing a social network. The financial sector is highly regulated, necessitating the issuance of many licences and adherence to intricate rules. In order to be able to handle financial transactions, X has already applied for a number of money transmission licences in the US.
Despite these obstacles, there is some hope because of Musk’s history of doing the seemingly insurmountable. If X is successful, it has the ability to overtake existing titans like WeChat in China and Grab in Southeast Asia as the most powerful FinTech business globally.
Competition from Well-Established Entities
Musk’s plans for X put it up against other internet behemoths like Apple’s banking services and Jack Dorsey’s Block (formerly Square). A variety of financial services, including as cards, deposits, loans, stock investing, and payments, are already provided via Block’s Cash App. Similar to this, Apple has used its substantial cash reserves to enter the financial services industry with its credit card and savings account offerings.
Musk hasn’t let the competition stop him. His confident prediction that X users won’t require a regular bank account by the end of 2024—along with a full range of integrated financial tools—reflects his confidence.
Regulatory and Trust Issues
But there are many obstacles in the way of becoming a financial titan. To control credit and regulatory risks, X has to assemble a team of compliance specialists and get the required regulatory licences. Furthermore, it will be difficult to persuade users to trust X with their financial information, particularly in light of the platform’s troubled background and current decline in advertising revenue.
Facebook’s botched effort to launch Libra, a stablecoin, highlights how difficult it is to win over users’ confidence and governmental permission. To stay clear of similar problems, Musk will need to carefully handle these hurdles.
A Worldwide Aspiration
Musk intends for X to operate outside of the US. In order to provide financial services on a worldwide scale, X will have to get licences in several jurisdictions, each with a unique regulatory framework. Considering the growing global monitoring and regulation of financial services since the late 1990s, this is an enormous challenge.
The Dream of the Super App
The idea of a “super app” similar to WeChat or Alipay in China has not yet gained popularity in Western countries, where current payment and banking services are usually enough. It remains to be seen if consumers in the US and other nations would accept a single app for all of their financial demands.
Notwithstanding these doubts, Musk has a proven track record of bringing big ideas to fruition. Although there was initially doubt about his aspirations to build interplanetary rockets, SpaceX now has contracts with the US government for space missions.
X’s Future
Elon Musk sees X as having a billion users and focusing primarily on finance. Even with the enormous hurdles, the ability to complete apparently unachievable initiatives will have global financial executives keenly monitoring him. Should Musk be successful, X may completely transform the financial services industry by transforming a social networking site into a financial behemoth.
