Facebook finally revealed its highly-anticipated next steps, unveiling Libra, the tech giant’s first coin cryptocurrency, on June 18.
What is Libra?
A white paper was released, highlighting the plans that Facebook has for its latest venture. Libra presents various features that are drawing the attention of both users and big financial groups. The currency can be used to send funds instantly through the social media platform as well as its subsidiaries Whatsapp and Messenger.
Ahead of the currency’s official launch next year, Facebook informed that consumers will have another payment method made available on websites such as eBay and Booking.com, with an additional incentive of lower fees when compared to conventional bank and card services. The virtual token has already garnered the support of 28 financial groups, the most notable of which include PayPal, eBay, Uber, and Spotify. For example, Libra can be integrated within daily payments such as Uber rides and Spotify subscriptions.
With over 1.7 billion adults outside of the global organised financial system, Libra “is to enable a simple global currency and financial infrastructure that empowers billions of people”. The cryptocurrency targets a billion people out of the global unbanked population who own mobile phones, and another half a billion who already have Internet access.
In Cambodia, only one quarter of the population has a bank account. What opportunities and threats can the digital currency pose for Cambodians?
Libra in Cambodia
In order to understand more about Libra’s impact, Geeks in Cambodia reached out to Mr Jojo Malolos, for his perspective as the CEO of Cambodia’s leading mobile banking services provider, Wing Money.
CEO of Wing Money, Jojo Malolos
“I think it will take some time before we see [the] adoption of a scheme this huge. I think success will not be driven by the innovation and technology that is being brought forward. Success will be based on the ability of Libra to get the unbanked to adapt to this channel for their financial transactions. For decades now, the world tried to capitalize on the phenomenon that there are now more people with phones than bank accounts. The de-banking of the banking industry, rendering financial institutions obsolete in managing movement of funds from one person to another, to an enterprise, from an enterprise to enterprise, to another person, [has] not happened as envisioned,” Mr Malolos expresses.
New figures have revealed that one in two Cambodians owns a Facebook account, and with such a highly social population, there is potential and positive environment for leapfrogging solutions. Social selling has been firmly entrenched in Cambodia’s social ecosystem, with most online local brands owning Facebook pages without a need for e-commerce platforms.
Local consumers have been making their orders directly through Facebook, and are most commonly using cash on delivery as a payment option. This is where Libra changes the game, as consumers can now complete their purchases directly on Facebook. Social selling on Facebook has already streamlined the process of marketing and transactions, and with Libra, online payment can now be added to the mix.
Mr Malolos elaborates, “If Libra indeed happens, there will be a huge transformation as envisioned when mobile financial services were initiated, when FinTech possibilities were pursued. More efficiency in funds movement, settlement, real-time payments, merchant payments, ‘when you need it’ disbursements, would make industries more productive, creating opportunities for more jobs, more successful businesses, more robust economy. FinTech companies will have shorter runways to prove themselves successful.”
Libra is also a great opportunity for microfinance in Cambodia through social media. Facebook can leverage the immense amount of data it possesses on its users, with the ability to reach more of the lower income communities connected to the local social network.
When asked about how Libra would impact existing financial services, Mr Jojo mentions the next steps for Wing, “Wing will continue to break financial inclusion barriers at the base of the pyramid, bringing real fintech to the unbanked and underbanked with more Wing agents penetrating remote economies much more successfully (…) With Libra it can only get better. Wing stands to be a big enabler for Libra as the most trusted channel, which the unbanked will deposit their funds into, connecting to more than 30,000 micro-merchants, 45,000 SMEs and MSMEs for various payment and disbursement use cases that can also be available in social media.“
Designed to appeal to largely social populations with limited presence of financial institutions, Libra almost seems to be adapted to growth and change in the Cambodian landscape. However, only time will tell, and Geeks in Cambodia looks forward to seeing the impact Libra can have on Cambodia’s booming economy.