Facebook wants to be your online bank
Sure, the core mission of the social media network is to make the world more connected by helping people share their lives. But Facebook knows people want to keep some things — banking, for example — private. And it wants to support those services too.
“There are certain things, whether itʼs financial services, or banking where I donʼt necessarily want my friends to know exactly what Iʼm doing, right?” David Robinson, Facebook’s director of global marketing solutions, U.S. financial services, asked a crowded room of bankers at a Securities Industries and Financial Markets Association (SIFMA) seminar in New York late last month. “I want to be able to go in and have an experience with my advisor or my bank and have that be a one-on-one experience.”
Facebook is quietly planning just such an offering with Australia’s Commonwealth Bank. Currently in an internal beta, with the first version built in March, the application is expected to launch sometime this year to customers. It will allow Facebook users who are bank customers to make payments to third parties as well as Facebook friends through the social media channel, according to the bank. Commonwealth will secure transactions with its own authentication system — similar to how payments are secured on its online and mobile banking site, a spokesperson says.
Facebook declined to comment specifically on the banking push. But Robinson is clearly communicating to the banking community that Facebook (FB) hopes other financial institutions will follow. The hope is that by creating private experiences on social media’s normally very public channel, banks can better engage customers, not to mention drive more traffic to Facebook, and open the doors to other avenues where the company can monetize its platform.
Commonwealth won’t be the first institution to enable financial transactions on Facebook. Facebook’s former chief privacy officer Chris Kelly is an advisor to Loyal3, a startup that allows Facebook users to buy fractions of shares in companies they love, and to share that on Facebook. Loyal3 launched the program earlier this year with Fifth & Pacific Companies (FNP), the publicly-traded owner of Juicy Couture, Kate Spade and other fashion brands.
But while Loyal3 assumes consumers will want to share the fact that they’re fans of a brand, the banking community knows that most personal financial activities are inherently private. And here Facebook is encouraging financial institutions to enable activities, like banking, with full knowledge that they won’t be shared, but they will still be ways to potentially broaden Facebook’s network and keep people engaged on the site longer.
Currently, just 16% of a brand’s fan base actually engages with a company’s Facebook page, notes Robinson. So finding other ways for users to interact with brands on Facebook could help Fortune 500 firms that are looking to grow their social media presence, while of course helping Facebook grow as well.
There are risks such as spam messages that could look like a friend in trouble, prompting users to send money through their Facebook app. But Commonwealth Bank says it won’t launch the app unless it can offer customers a 100% guarantee of security, a spokesperson says. Plus scams like these are inherent to any virtual medium today, and unlikely to deter the Facebook user who finds banking from the social channel a time saver.
And while Facebook may be encouraging banks to open virtual outposts today, other industries will likely also be interested in creating a private walled garden on the platform. Sure, people are coming to Facebook to share their vacation photos with pals. But why not collect their paycheck, buy medical insurance or pay the IRS there as well?
The company makes no bones that it sees itself as a channel where users supply content with Facebook acting solely as the conduit. However, touting itself as a place for privacy is an unusual marketing pitch from social media’s grand dame. And it’s one that officially Facebook won’t officially acknowledge.
“Facebook is a platform and a partnership company,” the company said in a statement when asked if other financial institutions would be opening virtual branches on Facebook soon. “We are supportive of brands and agencies, across industries, using the platform to better serve their customers.”