Have you heard the one about Facebook (Nasdaq: FB) being the banking hot spot of tomorrow? Very recently, the news got out that Facebook has teamed up with the Commonwealth Bank (ASX: CBA) to develop a banking app for the social media site. Within days, Citigroup (NYSE: C) got into the act by asking its fan base if they would do their banking via Facebook. Social banking, it seems, is coming of age.
Maturing attitude toward financial transactions
With nearly one billion registered users, it’s not surprising that the social media giant would be interested in courting banking institutions to offer services via Facebook’s platform. The concept is still gestating, but the instantly piqued interest of a banking heavyweight like Citi speaks volumes as to the importance of the idea.
Over the past several months, Facebook has been taking financial transactions on its site more seriously. The company recently updated its formerly clunky mobile payment system for its third-party developers, noting that annoyance with the old system was costing app and game developers money. It has also instituted a subscription billing system for developers, in an effort to help these companies tap into a customer base that’s willing to spend more for fine-tuned services.
Concerns about privacy
Like any app, Commonwealth’s new service will allow Facebook users to perform certain tasks through the social media site, such as making payments to vendors, and transferring money to Facebook friends. Transactions will be secure, because the bank will maintain its own security portal. Privacy, particularly on Facebook, has been an issue in the past and, as Citi is discovering, it’s still roiling with many site users. Many of those responding to the bank’s inquiry noted concerns about both security and privacy in regards to banking on Facebook.
Why then, when banks already provide their customers with mobile apps, would people want to bank specifically on Facebook? There are many reasons, one of which is convenience. For users who spend a lot of time on the site, it can be a lot like one-stop shopping. Being able to easily transfer money to others who also use Facebook would be quite a draw, I imagine.
If this concept takes root, other banking entities will surely jump on the bandwagon. Though Citi has a decent presence on Facebook, JP Morgan Chase (NYSE: JPM) has the most “likes” of any bank on the site, and just might be next in line to take advantage of that celebrity.
For Facebook, the more time spent logged in is more opportunity for the site to get users to interact with various services offered there. For the banks, it’s an opportunity to tap into nearly one billion new customers with minimal effort. What could be sweeter than that?
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A version of this article, written by Amanda Alix, originally appeared on fool.com
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