SocialFi:
The Future of Fintech is Web3 and Social
By
Juan Bruce

For decades, the tech industry has sought to get closer to consumer wallets, create frictionless funnels and make transactions seamless. Meanwhile, advances in user targeting have allowed advertisers and applications to better understand – and economically segment – their users.

Web3 is set to galvanize a brand-new revolution in fintech, one that offers a degree of access to digital wallets and data unimaginable ten years ago. And that revolution is going to be powered by social media.

The move to web3 promises big wins for fintech and consumer applications, especially when integrated into social media’s traditional strengths in demographic and social graph data. And it’s clear that big players are interested: Meta is reportedly developing a decentralized social media platform codenamed “P92”.

The road from Bitcoin to Decentralized Finance (DeFi) was paved by social media. There was no other choice, given mainstream media’s initial reluctance to engage with the concept of cryptocurrencies.

In the wake of the 2008 financial crisis, crypto early adopters built social media communities in order to learn from one another about the space and share news. An entire generation of web3 users and crypto enthusiasts has grown up together, bound together by a mix of shared interests, social interaction, and finance.

As an evolution of the crypto industry, web3 has always been firmly rooted in finance. Crypto wallets often function as the user identity for login on Web3 consumer apps as well as repositories for digital assets, neatly illustrating this underlying connectivity. But Web3 wallets lack the depth of traditional Web2 user data. Web3 social is about to bridge Web2 and Web3 data and user experience.

WEB3 Delivers Precision Personalization

Connecting consumers and fintech works to the advantage of both. Social and affinity graphs have been deployed for more than a decade to deliver not just targeted advertising but also targeted content and a customized user experience. But web3-native products can combine these tools with asset graphs and transaction histories: enriching offerings in a way Meta and Google could only dream about a decade ago.

Users receive recommendations for products, projects, and investments that correlate with their asset holdings and past transactions. When combined with social data and AI, the result is finely-tuned personalization.

You’re a sneaker fan on social and a tokenized sneaker fund is launching? You need to know about that. You’ve been a top-ranked game player and held some of the most valuable in-game NFTs? You should receive NFT airdrops that give you early access and special status in newly released games.

But let’s not forget that with blockchain technology, users can possess the power to control both the type and the extent of the personal data they want to share. They may also choose to disclose just enough data to get them personal offers without sharing their real-world identities.

From the platform’s perspective, advertisers and partners no longer need to create pools for users based on proxies such as gender, age, and location. Web3 can offer far more finely honed tools, allowing them to engage with individuals they know own certain digital assets, participate in DeFi, stake crypto, and are open to new projects and products.

Fund the Social Fabric, Unlock Fintech’s Future

Users, too, expect a lot from web3: access to DeFi, gaming, NFTs, social, lifestyle content, and every other consumer application – without the divisions and inconveniences caused by current tribalistic crypto ecosystems and clunky wallets.

Web3’s social layer will be critical to achieving this goal and integrating the different blockchains, not as a transactional bridge but as a correlation of each chain to the user.

Make no mistake, there’s still significant work to do. Many decentralized applications have barely evolved beyond their crypto roots, and remain clumsy to use, limited in scope and constrained to a single blockchain ecosystem. Web3 startups need to deliver powerful multi-chain fintech while providing a level of user experience, accessibility and sophistication on a par with web2 equivalents. The decentralized answer to Facebook must unify social graph, affinity graph, asset graph, transaction history – along with AI – in a platform that makes financial transactions accessible for partners in every industry vertical.

Facebook’s Open Graph, introduced back in 2010, was an amazing platform for startups and users. I know because I built Open Graph apps in that era. Companies like Zynga and Spotify utilized the social graph and platform virality to find new users and deepen user connections with friends around common activities.

This level of open integration no longer exists in Web2 social walled gardens. Web3 social has the opportunity to bring back open APIs and partner integrations that provide rich experiences for users and valuable growth paths for startups. The fintech in Web3 social can also empower financial transactions on the platform in a way that never existed in the glory days of the Open Graph. The monetization layer also provides a model for preventing Web3 social platforms from becoming walled gardens like their Web2 predecessors.

Web3 social can smooth the path for partners, providing increased reach and visibility through a more open social media landscape. And it will have the ability to nurture stronger user engagement through a more individualized experience that ties personalized applications from various partners in a unified social context. A social platform with this power can further build loyalty with blockchain-based incentives and rewards systems, such as access to exclusive content, digital events, or utility NFTs that privilege active participation.

The new web3 era has much more in common with web2 standards of product, engagement, and management than anything we have yet seen in crypto. This should be heartening news for heritage venture capital investors wondering about their relevance in web3. There is a whole cohort of startups crying out for their expertise. The marriage of fintech’s know-how and decentralized social promises limitless potential and real use cases.

As someone who spent years in the venture capital sector, with a focus first on media tech and more recently on fintech innovation, I know that for those who support the SocialFi sector, the potential rewards are enormous.

The first step is to fund the social fabric so crucial to fintech’s future growth.

So let’s get out there, put some capital to work, and realize the SocialFi future.