Facebook stirred up a bit of a hornet’s nest yesterday with this Wall Street Journal article which began:
The social media giant has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking account balances, as part of an effort to offer new services to users.
That got some immediate attention, as did the list of notable institutions who might be involved:
Facebook increasingly wants to be a platform where people buy and sell goods and services, besides connecting with friends. The company over the past year asked JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and U.S. Bancorp to discuss potential offerings it could host for bank customers on Facebook Messenger, said people familiar with the matter.
Facebook has talked about a feature that would show its users their checking-account balances, the people said. It has also pitched fraud alerts, some of the people said.
Within hours, the story had been walked-back a bit, with a clearer focus on account linking to Facebook Messenger, and an avoidance of privacy issues tied to any data use for ad targeting purposes. Account linking to Messenger is already an established practice with American Express and others. Amazon Alexa and others have similar arrangements, but Facebook has extra baggage from the data privacy debacle.
What is to be made of this de facto trial balloon? Based on industry reactions at this early juncture, we suggest:
- Expanding the in-stream Messenger functionality makes sense, both for FB and potential partners, and is the most likely focus. It would add value to all stakeholders.
- Competitive concerns arose on multiple levels, primarily large vs. small bank access, and FB’s role as a possible open-banking enabler in the U.S. From a FB business standpoint, a focus on big banks with scale makes sense (especially with a Messenger focus), and interfacing with thousands of banks either for Messenger connections or as an open banking convener seems to have doubtful payback.
- The timing was unfortunate, being on the heels of FB’s data privacy issues on one hand, and the OCC’s start accepting fintech charter applications on the other.
- The unclear description of the uses for the data desired from banks only led to more concerns about data privacy, forcing some banks to state publicly they would never share customer data.
We will likely hear more on this topic in the months ahead, because the one thing that IS clear is that banks are very interested and/or concerned about FB as a partner. Yes, there are big concerns about data privacy, but there is big interest in the opportunity as well.
Overview by Ken Patterson, VP Special Projects and Director, Customer Interactions