FACEBOOK MIGHT PARTNER WITH MAJOR US BANKS: Facebook reportedly asked major US banks including Citi, JPMorgan Chase, US Bank, and Wells Fargo to share their customers’ financial information, including card transactions and checking account balances, reports The Wall Street Journal, citing people familiar with the matter. The tech giant is reportedly developing offerings with banks for Messenger, including access to account balances and fraud alerts, as part of a move to offer new services and boost engagement.
It’s not clear at this point what, if anything, might come out of these partnerships. Since the publication of the WSJ article, Facebook asserted that it might partner with banks so that they can use Messenger specifically for customer support, but said it doesn’t have interest in going beyond that, according to Engadget.
But any sort of partnership between Facebook and banks could have an impact on issuers that’s worth exploring:
- Messenger can boost digital banking interactions. Banks are under pressure to build relationships with large digital platforms that reach billions of users and drive commerce, according to the WSJ. Messenger, which counts 1.3 billion monthly active users and strong engagement, could be a great way to do that. Facebook has already begun toeing into financial integration: The platform has a peer-to-peer (P2P) feature that’s available in multiple markets, firms like Mastercard have already launched chatbot-enabled purchasing, and PayPal also offers P2P services through the app. But if Facebook took it a step further and allowed for customer service integrations with banks, or other offerings down the line, it could be another channel that banks could use to encourage more frequent digital engagement, which, at many banks, is driving up overall consumer-bank interactions.
- But banks could also risk losing customer trust. Though a Messenger integration might boost engagement by making account information more convenient to access or customer service faster, it might not be a favorable feature among consumers in light of Facebook’s recent scandal with Cambridge Analytica, which exposed millions of users’ data. Consumer trust of the platform has declined 66% since the scandal — a figure that, at this point, could translate to consumer sentiment about bank information being used on Messenger, given that security is the second-most important category for choosing a bank, according to Business Insider Intelligence’s Mobile Banking Competitive Edge Report (enterprise only). Therefore, without allowing customers to opt in, this could be a poorly timed venture for major banks, since it might impact consumer trust of how financial institutions are handling their data.