The social-savvy wave of entrepreneurs
As more challengers arise to serve the world’s small and medium-sized enterprises (SMEs), a social-savvy wave of entrepreneurs is continuing to swell. They look rather different to the SMEs the industry refers to as having gone underserved by incumbents for decades. And they will push traditional banks to pivot their offerings once again – though many will argue they’re still a pivot or two behind.Platforms like Google’s YouTube, Beijing-based ByteDance’s TikTok and Amazon’s Twitch are attracting millions of content creators. In 2016, pre-TikTok boom, around 7.34 million people in the US made money on the following platforms: Twitch, Tumblr, Instagram and YouTube.
In 2017, that figure jumped to 10.97 million, according to lobby group, Re:Create Coalition. And the industry is showing no signs of a slow-down. In fact, the coronavirus has seen app downloads for TikTok boom. In the first quarter of 2020, app downloads reached 315 million – the best quarter for any app, ever, according to ad agency, Wallaroo Media.
But these entrepreneurs are fickle. Whilst their content creating eye won’t fade, the platforms they piggyback off can. Twitter-acquired Vine, the six-second video app, had 200 million users in 2015.
But a year later, it was practically obsolete. As the platform melted away, the names which came out of it kept their flames alight. Vine stars Logan Paul, Christian Leave, Brent Rivera, and Lele Pons all still have flourishing, obscenely lucrative content creator careers today.
These apps hold huge acquisition pools just waiting to be tapped by financial services firms. So, just how much are these young entrepreneurs making? In 2019, YouTube made $15 billion in advertising revenue. A big portion of this – though the internet giant won’t release the exact figure – goes to its creators.
One of TikTok’s most followed users, Charli D’Amelio, makes an eye-watering $48,000 for each of her posts. Imagine that multiplied by ten or so – that’s just her monthly income.
This Gen Z segment of the SME sector should not be sniffed at. They make huge amounts of money with next to no operating costs – so they’re ideal investments for banks and challengers. They’re not just young people – older generations can get millions of followers too.
We can also see that they stand the test of time, even if the platforms they use to push their content don’t. The reality is that there will always be a new platform in the running. If the US President Donald Trump bans TikTok because of its Chinese heritage, you can bet your bottom dollar a new app will swoop in to tap this burgeoning market.
But what should a banking offering look like for these entrepreneurs? FinTech Futures has come across a few potential small-time contenders for the ring. ChannelMeter, a US-based social software firm, landed $4 million in June to get into banking. Its new service, Creator Cash, will offer the challenger basics, plus an earnings scheme based on content analytics.
VibePay, a UK-based social payments app, launched its business offering this month. A payments rather than banking fintech, it helps entrepreneurs – whoever they bank with – get paid more easily through platforms like Depop.
And if you’re looking for a high-end offering, the investment banking space is seeing disruption as challengers like 220 try to tap the child stars earning more money than they know what to do with.
Whilst only 9% of US internet users used TikTok in 2019, teenage internet users formed more than 49% of that figure, according to Wallaroo Media. It’s these teenagers, their habits and lifestyles, which will have a heavy hand in shaping the future of the financial services industry.