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Twitter’s announcement that it is partnering with the crypto platform shows that Elon Musk is serious about a move into finance, but how impactful will this be?
Twitter’s fate since Musk took over has been uncertain. The chief executive even admitted in a BBC interview recently that he had not been enthusiastic about going through with the deal.
However, he has made dramatic changes, such as creating a subscription model that veers away from the comfort zone that Twitter users are accustomed to.
In addition, Twitter will give users the option to buy and sell stocks and other assets from eToro.
A new feature was rolled out on the Twitter app on March 13 that allows users to view market charts on an expanded range of financial instruments and buy and sell stocks and other assets from eToro.
This appears to be part of Musk’s move to make Twitter into a super app.
Twitter’s plan is “ambitious”, commented Maximilian Salomon, a banking consultant at Horvath.
“While the company's vision is commendable, there are several obstacles that could prevent Twitter from becoming the largest fintech company,” he said.
First, the German consultant pointed out that the US market is very different from the greenfield markets where super apps like China’s WeChat and Brazil’s NuBank have thrived.
“The American financial landscape is saturated with established banks, credit unions and innovative fintechs,” he said.
“Twitter's new financial services, such as stock and cryptocurrency trading, will need to offer a significantly better user experience and value proposition to outperform these competitors.”
Others, however, are more enthusiastic about Musk’s proposition.
“I always believed that Twitter is in an excellent position to become a super app because of its huge user base,” said Sam Boboev, co-founder of botcommerce.io.
One of the major elements of any super app is a critical mass or user base that will help the adoption of new features that are being added to the application, he noted.
“However, the West still struggles with the super app model due to regulatory and privacy concerns,” said Boboev. “If Twitter can prove that all the user data is safe and users can trust their money to the platform it has all the chances to become a full-scale super app.”
Salomon agreed that navigating the complex regulatory environment will be critical to success.
“Given Elon Musk's history with regulators, it remains to be seen whether Twitter can work effectively with the necessary authorities to achieve its goals,” he said.
“Compliance and cooperation are essential for sustainable growth in the financial sector.”
Despite these challenges, Saloman insisted that Twitter's move to diversify its offerings and integrate financial services, such as the partnership with eToro and the expansion of Cashtags, should not be dismissed out of hand.
“This venture could lead to valuable innovations and user experiences that contribute to the evolution of digital finance,” he said. “The final outcome will depend on Twitter's ability to adapt, learn from its competitors and work with regulators.”
This was echoed by Boboev, who noted mistakes made by Meta in its pursuance of its Diem, previously Libra, stablecoin project.
Meta’s advance in this space arguably triggered central bank and financial regulator’s anxieties regarding financial stability and monetary policy, giving way in part to the EU’s soon to be complete Markets in Crypto Assets (MiCA) regulation and the acceleration of central bank digital currency (CBDC) projects.
“That said, I appreciate the bold vision and willingness to experiment,” said Saloman. “The future will reveal the true impact of this strategic move on Twitter and the fintech landscape as a whole.
“Integrating financial services into a popular platform like Twitter has potential, but the company's success in becoming a leading fintech player is far from guaranteed.”
A logical move?
"With a $4bn hole to fill, cost-cutting can only get you so far,” said Jim Preissler, chief strategy officer at SOMA.finance.
“Twitter needs to go beyond advertising and monetise everything it can such as cash tags, hashtags and roll out premium offerings and services.”
Financial and crypto news and content is a core vertical for Twitter, Preissler said, suggesting that the partnership is “a natural fit”.
Here, Boboev agreed, branding it “a logical move”.
“It is a bit early to say if this is going to be significant for the platform or not,” he cautioned.
“We all know Musk takes inspiration from Chinese social media platforms such as WeChat and Alipay, and as soon as the company sees traction with this new feature I think it will start actively investing in other financial and crypto technologies.”
