If It Involves Money, It will be On Our Platform – Elon Musk

Elon Musk has long held a vision of developing a “super app” that offers a full suite of financial services. In a recent announcement to X.com employees, Musk reaffirmed that vision, declaring that in 2024 users of the X platform (formerly known as Twitter) will have access to a full range of financial capabilities beginning with payments and banking. The announcement elicited vitriolic responses from the press, industry pundits, and the general public.

Much of this is a knee-jerk response to Musk. So, it is important to think more deeply and objectively about his proposition. For example, Musk has been obsessed with financial services and even Banking-as-a-Service for decades. X.com was originally developed as a platform to provide banking, checking, digital payments, credit cards, investments, and lending prior to merging with PayPal in 1999. So, Musk has had a lot of time to incubate this plan and the company already has licenses for money services across nine states, which would allow the introduction of payments.

But the real question which few seem to be asking is: Can Elon Musk transition X.com to a “super app” experience that offers access to comprehensive financial services? The answer: It depends on the vision. What problem is he trying to solve, and how can he achieve critical mass? To succeed, he will need to have in place three core strategic elements.

1. An established social network of engaged users. X has actually lost users over the past year. Plus, its ill-defined user base of 358 million pales in comparison to other social platforms such as WeChat (1.3 billion). WeChat (the super app in China) began with a ubiquitous social network and then added products and services. To succeed, Musk must build an extensive “network” of engaged individuals and merchants. (X users include most brands and famous personalities.) Payments could then be added to solve for a specific financial issue which brings us to the next point.

2. A well-defined market need. Musk has not articulated the vision or the problem that X is expected to solve. For example, Grab, another successful app, works because it solved for a particular problem — ride hailing and delivery. X needs a commercial proposition that solves for a particular problem and the financial services industry may offer Musk an opportunity. For example, consumers are still looking for frictionless shopping, payments, savings, spending, investing, and money movement capabilities. Also, features such as social shopping and social trading are just beginning to evolve. There is clearly a need for more streamlined delivery and access to financial services within a retail environment. So this may be an opportunity for X.com even if the competition is extraordinary.

3. Trust. Trust is essential to building a strong brand and network. Given Musk’s polarizing nature, this is the biggest obstacle for him to overcome. But even here it is possible to imagine that technology can be employed to create a more secure identity layer leveraging KYC/AML processes, which prevents fraud. And, if the app leveraged underlying trusted institutions, custodians, investment managers, etc., then the brand (or sub-brand) could overcome the toxicity associated with Musk. But this is a tall order.

If Musk were able to meet these criteria, then the wind may be at his back. Emerging technologies such as GenAI, metaverse, and quantum can be used to scale and transform the financial services delivery model. Musk’s other strategic assets — Starlink, Tesla — may also provide leverage. So, while Elon Musk continues to capture headlines, it is important to look under the hood to understand the possibility behind his statements.