Facebook investors like focal point toward building banking relationships
Social networking giant’s stock gets boost as it turns to new ways to make money
SAN FRANCISCO Facebook Inc.’s shares rose on optimism that the company is forging deeper relationships with banks to offer customer-service products via its Messenger chat application, a business that could boost engagement as growth slows on its main social network.
Facebook has for years worked to make Messenger a natural place for consumers to communicate with businesses, aiming to replace email. Customers who opt in can already receive some airline boarding passes and receipts from PayPal transactions on Messenger. To do the same with major banks, Facebook has been trying to convince them that the conversations will be secure and customers’ personal data won’t be used in advertising.
“Account linking enables people to receive real-time updates in Facebook Messenger where people can keep track of their transaction data like account balances, receipts, and shipping updates,” Facebook said. “We’re not using this information beyond enabling these types of experiences — not for advertising or anything else.”
A Wall Street Journal report last week said the talks with banks are ongoing, sending shares up more than four per cent. The company has started to feel more urgency to make money from its properties beyond the Facebook social network since saying last month that sales growth will slow and expenses will climb in the next few years — a forecast that sent the stock tumbling 19 per cent in one day. The company has also been facing questions about its ability to safeguard data following a series of scandals, including a third-party app that mishandled private user information. Some users may be wary of sharing especially sensitive financial details.
Still, Facebook has been building up user comfort with sharing financial information through its site for years. It already allows money transfer between friends and e-commerce transactions with businesses through Messenger. It also lets people buy and sell items through Marketplace, its version of Craigslist. And those on Facebook have become more comfortable using their credit cards in the news feed because of a product that enables people to ask their friends to donate to charitable causes.
Four years ago, Facebook recruited then-PayPal Holdings Inc. President David Marcus to run its Messenger platform. Marcus, who in May was re-assigned to lead Facebook’s blockchain efforts, had been focused on forging deals with major banks and payment companies to bring financial services to Messenger.
Facebook reached out to JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and U.S. Bancorp in the past year about partnering, the Wall Street Journal reported, citing people familiar with the matter.
A spokeswoman for Wells Fargo declined to comment on the report, while representatives from JPMorgan Chase and Citigroup didn’t respond to requests for comment.
“We haven’t shared any customer information or data with Facebook or any other technology platform,” Dana Ripley, a spokesman for U.S. Bancorp, said in an emailed statement. “Protecting our customers’ privacy and personal information is our highest priority.”
The social media giant partnered with American Express Co. in 2016 to enable customers to see past purchases, check card balances and learn about benefits and rewards through Messenger. Last year, Wells Fargo said its chatbot on Messenger could enable customers to see how much they spent on certain items in a specific time period or find the location of the nearest ATM.
Facebook’s person-to-person payments capability inside Messenger ranked below similar offerings from Square Inc., Apple Inc. and PayPal in a review from Consumer Reports.
Facebook’s payments product was given lower than average marks on data privacy, which measures data control, collection, retention and deletion.
However, Facebook received good marks for “offering detailed terms of service and end-user agreements that explain how they use consumers’ data,” Consumer Reports said.