The traditional money networks, our financial institutions and our banking system, have undergone a slow, ineffective and disjointed evolution.

Instead of taking a step back to examine what the money network is, and whom it serves, bankers have tried to apply quick-fix technology solutions, such as telephone and mobile banking, to undefined problems. But we are still writing physical checks, we are still standing in line during our lunch hour to get personal service, and we are still paying exorbitant fees for the luxury of our banks giving us access to our money.

What bankers have failed to recognize is that a money network extends far beyond your money and your bank. Your money network is your job, your paycheck, the bank, your mom, your 401(k), your grocery store, your website, your bills, your cousin in Germany. The more you examine your own money network, the more you realize how closely it resembles your other network.

If your social networks can connect so many aspects of your life, why can’t your money network, a far more crucial aspect to your life, do the same? Because banks, which have defined up to today what a money network is, aren’t equipped, or even concerned, with understanding what you do with your money once it leaves the nest.  Those who are concerned with how you spend or send your money have made the connection: more and more, Facebook is laying the groundwork for becoming the new money network.

Facebook is the most visited multi-user connected network, tapped by more than a billion users.  Facebook has money transmitter licenses that are legally required for sending or receiving money domestically and internationally.  Facebook, a registered money services business like Western Union, is obliged to assist different branches of governments in the countries where it operates to report signs of financial fraud, money laundering and other financial crimes.  Just like PayPal, Facebook has an identification protocol that is striving to meet the client identification program of the Bank Secrecy Act’s Anti-Money Laundering program.  

With today’s money networks, as a sender of money, I am disconnected from the receiving party. My bank cannot inform me of my business clients’ “likes” and “dislikes.” My bank has no information on what my customers buy outside of my website, let alone their demographics and purchasing behavior. In Facebook, these statistics greet you as you log in and suggestions on how to connect with even more potential customers are as close as “Promote Your Page.” Your money can tap into a network where the client reach limit is anyone with a Facebook account. What’s even better? Users will log in to their Facebook accounts more often than they will log in to their bank or online money accounts. So, does “connecting” people on both ends of a financial transaction improve that transaction? Apparently it does.

A study by Anne Nagurney (published in Netnomics in 2004) discussed such a scenario, Supernetwork, in which sellers and buyers transacted in multiple currencies, across multiple countries, on a social network akin to existing relationships of a commercial transaction with existing players (consumers, retailers, suppliers, ancillary players, etc). It computed the interaction between the different points and found that it would be much easier to achieve a balance between net revenue maximization and risk minimization, when all components were connected in a manner similar to a social network. It also demonstrated that the risk would be further diminished if the product being sold in these transaction were virtual, obliterating the component of “country.” The most revolutionary conclusion of this study, however, is that the classic primary drivers of commerce, notably “price” and “demand,” would become secondary to “relationships” in such a Supernetwork, for physical and e-commerce transactions.

Relationships define the core of a social network as they provide the cohesion needed for its components to be linked by strong communication. These distinctive components – structure, content and function – are Facebook hallmarks. There are one billion plus Facebook users (structure) communicating daily, even hourly, with family, friends, employers, companies and interest groups, on every topic (content) ranging from family obligations to political uprisings, from personal experiences with a company’s product to social campaigns that can affect an entire generation. Facebook functions as the global village’s living room where all members can exchange ideas, support one another, express likes and dislikes, and get step-by-step instructions; where everyone can communicate, virtually uncensored, instantly and in real time with whomever they wish.  

Now throw money into the mix.

Incorporating the relationship element into today’s money network will change the “what” we are selling to “who we are selling to”, and most importantly “how.” With Facebook’s legal backbone evolving from an online social communication portal into one that connects members’ social interactions with their financial ones, it is time for the banks, financial institutions and money transmitters to not just take notice but take the first step. Instead of reinventing the social media wheel, why not facilitate the ride. How Facebook has changed the global village’s campfire to a highly-interactive living room has brought into focus just how connected we all want to be, especially with our money. Will Facebook be able to connect us directly with our money, thereby bypassing financial institutions? Or, will payment companies and traditional financial institutions enter the social space to standardize the social commerce transaction as the ultimate ROI?

Pervees Faisal Islam is the Director of Compliance Advisory Services at

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