Fintech Horror Stories - Unraveling the Threads (or where I sound like the grumpy uncle in the room)

There is some fintech relevance here. Trust me.

The newsletter took an unexpected mental health break for a few weeks, only to be quickly prompted back by the rapid emergence of Threads, the brand new social network that everyone is talking about. I don't intend to use this as an attempt to rehash what tons of people are already saying, so if you want a good primer on what this is, and some expert analysis from a great mind (and a king of memes) you can check out this great piece by Turner Novak:

Threads, The Fastest Growing Product Since ChatGPT (thespl.it)

Let me get this out of the way, because it's perhaps the one overly positive thing I'll say about this - I'm having a blast - it's a lot of fun, and it's something that came at the right time. Okay, with that said - as always, this newsletter brings it back to Fintech and more specifically, what it means for the average consumer. Since this is a (pretty shameless) attempt to capitalize on people's exasperation with Twitter and Elon Musk specifically, the comparison has to be made. And there are a few things that are missing on the new platform which remain to be implemented (and may never be implemented):

--Social media as a banking/fintech customer service channel - One of my favorite parts about Twitter (and the genesis of this newsletter) is going into the reply section of any given bank, fintech, or finserv institution and seeing how angry the customer base is (and also how responsive the company is in addressing those concerns). Some of the stories are, frankly, heartbreaking in nature. But it's a fairly representative swath of the working class (albeit skewing slightly younger) that cuts through the BS and joy with a pain-filled knife, exposing terrible practices and avoidable mistakes that companies frequently fail to resolve. On Threads, while the platform is still new and I'm willing to see how it plays out, I'm getting a sinking feeling that this sort of interaction is not going to be welcome or acknowledged (or even work) - Twitter allows anyone to start their "new thread" if you will by tagging another user (or company in this case) and also allowing said interaction to be searchable even if you just look up the handle (you can see all the things that people say about said handle, which is great). Precisely because Threads is driven by Instagram, all you can see when you search is other accounts, and not specific content (unless it is a one word hashtag, and even then just one hashtag only). Given this has been an issue with Instagram for years (probably the worst search engine of any social media platform), I don't expect this to get better "over time" for Threads since it has never been fixed with Instagram (the platform from which it is spun off).

--Toxic Positivity and how it restricts consumer accessibility - There have been a lot of rumblings from users that they want nothing but "positivity" and "being nice" and the Meta staff has latched onto this, squarely setting "politics and news" in its sights (but might also expand to "negative interactions"). Given that having a meaningful customer service interaction with a brand/bank/fintech/etc would require them to start a dedicated thread just to capture all the complaints, there's a simple way for them to get around this on the new platform and seemingly ignore pesky customers who just seem to "kill the vibe," as it were - all they have to do is not start threads for anything but feel-good marketing content. Who's going to stop them - the regulators? Well, as of today, none of the major US regulators have made the jump to Threads (other than the FDIC, although they are really quiet).

--UDAAP/Marketing/Endorsements - somewhat related to the above, because of the obsession with positivity, it's almost a given that brands and companies, including fintechs and banks, will be making a ton of claims about how amazing their products are, or what it can do, and while to some degree these claims/posts may be tongue in cheek, given the nature of social media there is almost no way to tell what is actually a joke and what is a fact which brings UDAAP into play. As an example, Chime has already admitted "Our legal team isn't on this yet." While that may have no bearing, the recklessness that is inherently present for these well known institutions is pretty alarming. Combine that with numerous celebrities/influencers replying or chiming in on posts by brands that they may or may not be using, presumably without any prior agreement, and the situation gets even worse.

If I sound like the grumpy old uncle, it's because when Facebook, Twitter, YouTube, and Instagram were new and or scaling exponentially, these were some of the biggest points that were forgotten in the hype machine and ultimately got called out by the regulators in high-profile lawsuits. These create headaches for the customer, ultimately create headaches for the consumer, and result in a much poorer all around experience for everyone including the employees. With that said, what do I think will happen with Threads?

--After the initial buzz and some of these things becoming apparent (as they already are for me), many users will go back to their platforms of choice and that includes Twitter. Ultimately, the UX originates from Instagram, and no matter how much people want to turn it into a version of Twitter that isn't run by Elon Musk, it is truly its own thing. If anything, the rise of this platform should hopefully remind Musk and his team that they can't take user loyalty for granted and it will force more care of the platform and a rethinking of how they have treated the users and the employees since his takeover - ultimately resulting in a better end product.

--Advertisers will descend on the platform and it will make the site almost completely unusable. People (self included) are already complaining about the notorious Meta algorithm forcing content of celebrities and influencers into the home page that we would all rather just avoid. But one of the biggest reasons why Meta launched this app is to completely knock out Twitter's advertising (something they had already pulled ahead on, in 2016), and you can expect to see "Sponsored" almost every third or fourth post. What will that do to the usability of the site or user engagement?

--Privacy and competition issues will emerge given the fact that it is Meta at work here. As the regulators (particularly those in the EU) size up all the permissions needed to use the app, and they begin to consider the monopolistic implications of Meta having under its roof Facebook, Instagram, WhatsApp, and now Threads, it will just add more fuel to the fire of rumblings about breaking up the company (which Alphabet usually tends to get the most noise about, but in this case Meta will probably become another target).

In any case, these are some initial thoughts. I'd love to hear yours, and would love to connect on Threads itself - follow me here. See you next week!