The social media giant's move comes as it continues an aggressive rebranding campaign and pushes into financial services, with a particular focus on virtual reality and fintech.
Novi is a digital currency wallet launched in October 2021 to hold stablecoins like the Paxos Dollar (USDP). The app enables users to make purchases and transfer money more quickly and efficiently through their smartphones.
Customers have been seeking a quick and easy way to exchange fiat currencies, such as dollars and euros, into cryptocurrencies for some time. Stablecoins, linked to real-world assets like dollars and euros, have long been a significant conduit for customers moving from fiat currency to cryptocurrency.
In a recent tweet, David Marcus, the co-founder and leader of Novi, said, "Today with Facebook becoming Meta, we're unifying our payments and financial services unit and products under the Novi brand. Let me unpack what this will mean across Meta."
The word "Novi" translates to "New" or "Accept" in the Latin language. This translation seems to be the perfect match with what the social media giant is trying to accomplish in terms of building a 'new' wallet to make and 'accept' payments.
Since 2019, Facebook has been busy expanding its Messenger chat app with features like peer-to-peer payments. Now it wants to make sure its financial technology initiatives are all under one umbrella.
Crafty risk management
Building subsidiaries and renaming brands often get associated with reducing risks as it decreases accountability to the associated companies despite increasing confusion. Big corporations also use it as a way to avoid monopoly related lawsuits.
In recent years another big tech company to restructure was Google, which named its holding company to Alphabet. While Facebook's move will likely go down well with its compliance department, it is still unclear if the new name will be an issue for users or regulators.
In a recent letter written to Mark Zuckerberg, U.S. lawmakers Richard Blumenthal, Brian Schatz, Sherrod Brown, Tina Smith, and Elizabeth Warren wrote, "Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient."
Nadine Dorries, the UK's Minister for Digital, Culture, Media and Sport, also said, "Rebranding doesn't work. When harm is caused, we are coming after it." in regards to Facebook's recent name change.
Nevertheless, it could be argued the Novi platform does offer advanced Know Your Customer (KYC) checks. It also boasts protection for personal information and against fraud, with options like two-factor authentication and manual investigations.
It appears any brand linked to Facebook will have problems in the future due to the company's prior mismanagement of user data and its failure to pay adequate taxes in the countries where it does business.
However, the Novi Wallet has been designed to bring fintech products and services to more customers than ever before while also aiming to make them easier to use. Overall, it isn't easy to guess how things will pan out for Novi or even Meta - only time will tell.
- New Fintech regulations and the changing climate of 2023Financial Services (FinServ)
- WEF Great Reset could fail if crypto remains unregulatedCrypto
- FINTECH LIVE VIRTUAL event reveals May 2023 'Save-the-date'Financial Services (FinServ)
- Budgeting finances in 2023: Open banking and PFMsBanking