Should X, formerly Twitter, manage to go through with its owner’s recently stated goal of turning it into America’s first app for “someone’s entire financial life,” banking regulators will have a thorny problem on their hands.
As Nika Cataldo writes in this week’s issue, other countries – particularly in Asia – have far outpaced the United States in the sophistication of their consumer financial sector.
“Everything apps” are a common sight across the Pacific, thanks in part to high unbanked rates before 2010 and youth-heavy markets that offered fintech companies and banks a tempting target for their products.
A fully built-out app like this, as Cataldo explains from personal experience, can be a powerful competitor to a legacy bank and its limited digital offerings – despite the strides some Massachusetts banks are making.
That’s obviously what X owner Elon Musk seemed to have in mind when he told employees in an all-company call Thursday that he is charging the company with launching services like high-yield money market accounts, debit cards, checks, instant payments and loan services by the end of 2024.
“When I say payments, I actually mean someone’s entire financial life,” Musk said, according to tech news outlet The Verge.
This kind of “killer app” has long been one of Musk’s dreams, and details are still thin on just what kinds of services, and therefore what kinds of licenses, X need to turn this dream into reality.
But should Musk try to move into banking proper, regulators would have to decide if the same man who sits for marijuana-fueled, live-streamed interviews – as Musk did in 2018 with podcaster Joe Rogan – can truly be trusted with a banking charter.
After all, he’s famous for his erratic corporate decision-making and has a strong track record of ignoring federal financial regulators. Just ask the Federal Trade Commission how well Musk has done complying with its orders. You might also ask transportation experts about the safety of his other company Tesla’s much-hyped “autopilot” feature, blamed for several crashes that killed drivers who apparently trusted Musk’s widely-reported pronouncements that the cars were capable of “full self-driving.”
If X does secure a banking charter, it will be a significant departure from the behavior and business practice standards regulators have held most bank executives to in the past.
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