Facebook sees Calibra as a stepping stone to financial services (FB)

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If Facebook’s crypto and digital wallet play gets off to a solid start, it could empower Facebook to begin offering more financial services in the future, Calibra VP of Product Kevin Weil said in an interview with Stratechery cited by CNBC.

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For context, Calibra is a recently introduced subsidiary of Facebook that’s tasked with developing a digital wallet for Facebook’s forthcoming cryptocurrency, Libra.

Weil suggested that Calibra’s launch could set the stage for Facebook to offer financial services like credit, and that it could increase traffic on Facebook’s own commerce engines, like Marketplace and checkout.

Here’s what it means: Facebook thinks that Calibra is its ticket to becoming a financial services giant, and it may target underserved consumers to reach those heights.

Calibra could have wide reach via Facebook’s network, including customers excluded from traditional financial services. Facebook boasts 38 billion monthly active users (MAU), giving Calibra an immense audience that can jumpstart its adoption once it launches. And with 2.7 billion consumers using at least one of Facebook, Instagram, WhatsApp, and Facebook Messenger a month, it has a number of avenues to reach its huge user base. Its reach could help Facebook target unbanked and underbanked consumers given Calibra’s eventual accessibility to consumers with lower-end smartphones, though it remains to be seen exactly how feasible this strategy will be after its launch.
Facebook’s wide reach could give Calibra an audience for new services. If Calibra proves popular among users of Facebook’s family of platforms, it’ll have the opportunity to add other services, like credit, for an already engaged user base. And if it successfully targets underserved consumers, it can tailor offerings to their needs in an effort to become their leading financial services provider. This can be particularly effective in emerging markets, where customers have often entered the financial ecosystem through an alternative player: In Kenya, only 27% of consumers had access to formal financial services before mobile money service M-Pesa launched in 2007, and that share rose to 75% by 2017, for example.

The bigger picture: But as Facebook reportedly leans more heavily on payments and commerce as revenue, increasing business on its own platform might be where Calibra has the most impact.

Facebook has been pushing its payments offerings, and Calibra could help unify those. The company has been building out its commerce capabilities by adding native checkout experiences to Instagram and Facebook, among other moves, with Instagram already seeing successin convincing consumers to use it to shop.

Now that Facebook is pivoting to focus on privacy, payments represent a valuable opportunity, both because it could leverage data security and privacy to become an attractive payment option and because payments represent a source of revenue to complement ad-related earnings.

If Weil is right that Calibra will enable more consumers to shop through Facebook’s offerings, it could drive higher levels of volume through the company’s channels, winning it new revenue and helping prop up its potential new strategy.

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