Facebook has asked several large US banks to share detailed financial information about their customers, including checking account balances and card transactions, as part of a new push to offer new services to its users, according to the Wall Street Journal.
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. -WSJ
Facebook's new feature would show people their checking account balances, as well as offer fraud alerts, according to the WSJ's sources, while the banks are apparently waffling over data privacy concerns.
The negotiations come as the social media giant has fallen under several investigations over data harvesting, including its ties to political analytics firm Cambridge Analytica, which was able to gain access to the data of as many as 87 million Facebook users without their consent.
One large bank withdrew from talks due to privacy concerns, according to the Journal, however Facebook swears that they're simply trying to enhance the user experience and won't use any banking data for ad-targeting.
Facebook has told banks that the additional customer information could be used to offer services that might entice users to spend more time on Messenger, a person familiar with the discussions said. The company is trying to deepen user engagement: Investors shaved more than $120 billion from its market value in one day last month after it said its growth is starting to slow.
Facebook said it wouldn’t use the bank data for ad-targeting purposes or share it with third parties. -WSJ
“We don’t use purchase data from banks or credit card companies for ads,” said spokeswoman Elisabeth Diana. “We also don’t have special relationships, partnerships, or contracts with banks or credit card companies to use their customers’ purchase data for ads.”
While banks have been under increasing pressure to build relationships with large online platforms and their billions of product-consuming users, they have struggled to gain traction in mobile payments while trying to reach more customers online. That said, they have been hesitant to hand over too much information to third-party platforms such as Facebook - preferring instead to keep customers on their own apps and websites.
As part of the proposed deals, Facebook asked banks for information about where its users are shopping with their debit and credit cards outside of purchases they make using Facebook Messenger, the people said. Messenger has some 1.3 billion monthly active users, Chief Operating Officer Sheryl Sandberg said on the company’s second-quarter earnings call last month. -WSJ
Both Google and Amazon have also asked banks to join their online platforms with data-sharing agreements that would provide basic banking services on applications such as Alexa and Google Assistant, according to people familiar with the conversations.
“Like many online companies, we routinely talk to financial institutions about how we can improve people’s commerce experiences, like enabling better customer service,” said Diana. “An essential part of these efforts is keeping people’s information safe and secure.”
Facebook has beefed up privacy measures since the data harvesting scandal broke - rolling out new features such as "clear history," allowing users to prevent the platform from collecting their browsing details off-Facebook. It's also making greater efforts to alert users to their privacy settings.
That said, bank executives are still concerned over the scope of information being sought by Facebook - and are willing to maintain their distance over privacy issues even if it means not being included on certain platforms that their customers use.
JPMorgan isn’t “sharing our customers’ off-platform transaction data with these platforms, and have had to say no to some things as a result,” said spokeswoman Trish Wexler.
Banks view mobile commerce as one of their biggest opportunities, but are still running behind technology firms like PayPal Holdings Inc. and Square Inc. Customers have moved slowly too; many Americans still prefer using their cards, along with cash and checks. -WSJ
In order to crack into the world of online payments and compete with PayPal's Venmo, several large banks have connected their smartphone apps for quick money-transfers through the Zelle network. While usage has risen, many banks still aren't on the platform. Meanwhile, Facebook has been trying to turn their Messenger app into a hub for customer service and commerce - "in keeping with a broader trend among mobile messaging services," reports the Journal.
American Express already lets Facebook users contact their customer service department, while PayPal struck a deal with the social media giant to allow users to send money through Messenger. Furthermore, Mastercard cardholders can buy products from certain merchants via Messenger using the card company's Masterpass digital wallet - while the company says Facebook can't see card information.
The initial reaction is positive in Facebook shares - up over 2.5% - but in context of the earnings collapse, Zuck has a long way to go.