Now it’s Facebook’s Turn to Enter P2P Payments

Now it’s Facebook’s Turn to Enter P2P Payments
A couple of weeks ago, Facebook announced it would bring P2P payments to its Messenger platform for customers in the US. According to a Finextra article:
“To send money through the free new feature, users start a message with a friend, tap a ‘$’ icon, enter an amount, and then hit the pay button. The first time a payment is made, people are prompted to add their Visa or MasterCard debit card details. For subsequent payments, users have the option of creating a PIN. To receive money sent to them, recipients open the conversation and tap ‘Add Card’ in the message and – the first time – add their debit card.”
Facebook’s announcement should not come as a surprise – rumours of a possible entry into payments have been swirling around since David Marcus, former CEO of PayPal, joined Facebook to run its mobile messaging business. Many other social platforms, such as Snapchat and Line have introduced P2P payments capabilities, while PayPal’s Venmo, a very popular P2P service also places social as a key element of its value proposition. At Celent, we have been talking for some time about “contextual payments”, where payments are embedded deeply into the overall context of the customer’s activity and becomes a seamless part of the customer’s digital and physical experience. Uber and AirBnB apps are often given as examples of such contextual payments. Facebook is also a provider of a unique digital experience – a social community exchanging messages, photos, and videos. Extending the service to the exchange of money is a natural next step. Consumer P2P payments are notoriously difficult to monetise – most services are free for consumers with providers charging fees typically only when loading funds from credit cards. However, if Facebook can persuade customers to register their cards, more commercial opportunities are likely to follow. The company already has a powerful analytical platform, which can help merchants reach consumers with targeted messages. Back in July 2014, Facebook said they were testing a “Buy” button, which would allow customers to buy goods directly from Facebook. Of course, Facebook is a global platform with users all over the world. Bringing P2P to its global community would represent a really interesting opportunity, albeit with significant regulatory and technical hurdles. Only time will tell the extent of Facebook ambitions. In the meantime, the US consumers are getting spoiled with choice on how to send each other money.

Facebook Banking: Don’t Bank on it

Facebook Banking: Don’t Bank on it
On May 5th 2014, La Caixa, one of Spain’s largest financial institutions, officially announced the launch of a Facebook app that provides users access to online banking features through the Facebook platform. It’s just the second bank in North America and Europe to launch a Facebook banking app, and, as far as Celent is aware, the seventh globally. In the weeks following the announcement, I was able to speak with a few different banks about the news, and surprisingly, while they were aware that Facebook banking existed, most were unaware how many banks around the world supported it. This couldn’t come at a better time, as Celent’s recent report, Banking on Facebook: An Overview of Banks with Transactional Facebook Apps, provides detail and analysis of the current offerings, highlighting interesting use cases and opining on the broader applicability of Facebook banking apps in financial services. Efforts are in the early stages, and even the most mature Facebook banking applications have not come close to replicating what’s possible through mobile apps. But are customer customers ready to adopt Facebook as a channel? Not really. In the figure below, taken from a Celent consumer survey last year, only 1% of respondents favored Facebook and Twitter as methods for engaging with their financial institution. In 2012, Citibank asked users about Facebook banking. The response was a resounding ‘NO.’ Users made it clear that they were not ready, echoing long-held sentiments about the perceptions of social media, and illuminating the challenge banks face in developing the channel. Consumers Preferences For Engagement Do Not Include Social Media Untitled Source: Celent US/ Canada Consumer Survey, July 2013/ November 2013; If you had an important topic you would like to discuss with a banker, how would you prefer to do so? N=1028 Celent believes that Facebook banking is only going to be the right choice for a very small group of institutions, given the following:
  • Banks don’t have unlimited resources to dedicate to throwing things against the wall in order to see what sticks
  • Most banks have a long way to go in other channels
  • Social media popularity is a guessing game
  • Despite the popularity of social media, consumers and banks are still uneasy about conducting transactions over social channels
This isn’t an indictment against innovation in social media. Social media is becoming a bigger part of financial services, and many, including Facebook themselves, are investing in social transactions. Social media and banking have a bright future together, however many in the industry are having a hard enough time developing functionally rich and well-designed mobile or tablet apps. Institutions should prioritize those investments for the time being. Banks like ASB Bank, DenizBank, FNB Bank, GTBank, ICICI Bank, La Caixa, and Tangerine (ING Direct Canada) have made Facebook banking applications an integral part of a broader social media strategy. FIs will gain the most value not by mirroring these applications, but by looking at what these institutions have done through social media. Celent found that banks supporting Facebook banking tend to have robust and highly innovative social media strategies. ASB Bank hosts a virtual branch through Facebook, GTBank allows for ‘instant account opening,’ and FNB Bank has created a social media persona that unifies the customer experience across all social platforms. The convergence of social media and banking marches on, despite the uphill battle that many institutions face validating some of the concerns consumers have, and the inherent challenges of each platform. Facebook banking isn’t going to work for all (probably most, at least for now), but lessons can be learned from the ways in which these banks have crafted solid social media strategies. Institutions looking for social inspiration need only visit their pages.

Are Bank Facebook Apps the Future of Digital Banking?

Are Bank Facebook Apps the Future of Digital Banking?
Should banks have a Facebook presence? What should they actually offer to customers via Facebook? Should it be informational or dare I say it, transactional? A couple of interesting announcements and feelers have surfaced lately:






A handful of banks have already gone wild on Facebook , a notable example is ICICI.

icici

Is Facebook going to be a viable access point for consumer transactional needs? In my opinion, banks that are enabling or attempting to enable transactions via a Facebook app are barking up the wrong tree. I’ve seen nothing to suggest that customers want this or would even use this. In fact, I’ve seen evidence of the contrary. Security concerns are without a doubt the number one issue. Furthermore, most US and Canadian banks have to jump through multiple compliance and legal hoops simply to post basic info on Facebook. My quick take – banks have so much room to improve across digital channels. Time and money are better spent improving online, mobile, and tablet experiences. Even if banks do go the route of offering Facebook transactional banking apps, they are likely to suffer the same fate as iGoogle. The web is boundless, and I don’t see Facebook as the primary “portal” for transactional banking. Facebook is still primarily about interacting with friends and family. Brands clearly have some sort of home on Facebook, but hey, we all know what the value of a “like” is really worth on Facebook (or do you?). Please chime in. Are Facebook banking apps the future of digital banking?