SnapChat to Offer Financial Advice to Its 100 Million Users, Millenials
Social media applications are playing an ever-increasing role in the daily lives of consumers all over the world, and it looks like SnapChat wants to take things one step further. Not only will this app let users send and receive disappearing photos or videos, but it’s also developing a new feature to manage your finances. Consumers can only hope those finances won’t disappear after a while as well.
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SnapChat as a Finance Manager
It is no secret the financial ecosystem as we all know it is prone to be disrupted sooner or later. Not only the FinTech industry but also popular digital currencies like Bitcoin are showing the world how things can be done differently without too much effort. Furthermore, social media platforms are now entering the mix as well, as SnapChat recently unveiled their plan to become a finance manager.
Keeping in mind how social applications – such as SnapChat – are mostly used by young adults, they are the exact demographic that is looking for alternative financial solutions. Bank accounts and credit cards hold little to no value to these people, as they want to explore the boundaries of mobile payments, peer-to-peer transactions, and splitting bills automatically.
Millennials, as this demographic is often referred to, present an interesting social experiment group for SnapChat and their new plan. As one would come to expect, the new feature being developed is focusing its attention on the mobile ecosystem, and a separate application will be created. Users of this app can then directly make investments into financial products offered to them.
Reginald Browne, head of ETF trading at Cantor Fitzgerald told Reuters:
“The opportunity to deliver financial services for social media platforms is amazing and potentially disruptive, especially in its ability to engage a Millennial consumer set that’s still emerging.”
None of this would be possible without developing some algorithm to facilitate investment strategies. A new trend is emerging in this sector of “robo-advisors,” as technology can help Millennials make well-educated decisions when it comes to retirement planning. By the look of things, there seems to a be a growing interest in this industry.
In fact, according to a national poll commissioned by the American Institute of CPAs (AICPA) and the Ad Council, Millenials’ financial habits are largely determined by their social circles. The survey found that 78 percent of young adults use their friends’ financial habits to determine their own. This is certainly a trend social media platforms such as SnapChat don’t want to miss out on.
It is important to keep in mind this new feature by SnapChat will allow just any investment or trade. The company wants to focus on the exchange-traded funds sector first, as trading vehicles such as ETFs are more easily accessible. With over 100 million monthly active users, the opportunity is well worth exploring apparently.
SnapChat has seen mild success in the financial services sector before, as the company launched a money-transfer service – called SnapCash – back in November of 2014. This service came to fruition after partnering with Square, letting SnapChat users send money to each other by using a debit card.
Bitcoin Promotes Financial Responsibility
Even though the robo-advisor sector might seem very appealing to various companies all over the world, they all seem to hamper freedom of choice. These applications and platforms will serve as an advisor to make – hopefully – profitable investments, but in the end, the user will still rely on third-party advice and services.
First of all, there’s the matter of who will be holding the funds on behalf of the consumer. SnapChat has revealed no details in this regard, and it remains unclear if a third party service provider will be used to store user funds and assets or not. Consumers should always be in full control of their finances, and this service is not providing that by the look of things.
Secondly, Millennials and other consumers are perfectly capable of making an investment on their own accord, without any social media company involvement. It is not unlikely various financial players will approach SnapChat and other companies to “promote” their offerings in exchange for financial compensation. If this were to happen, the question then becomes whether or not the algorithms will still give unbiased advice or not.
Last but not last, why would anyone want to rely on advice by a third party to begin with? If Millennials want to invest, there are plenty of options at their disposal. Bitcoin is one of those options, a popular digital currency that puts the end user in full control of their funds at any given time. Plus, unlike most other financial assets, Bitcoin is in a prime position to gain more value over time, although it should never be seen as a short-term investment.
What are your thoughts on this announcement by SnapChat? Is this something Millennials can benefit from? Let us know in the comments below!
Images courtesy of SnapChat, Shutterstock