Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

Industry Perception, Optical Delusion

January 14, 2013
/   Insights

In Washington, they talk a lot about ‘optics.’ This has nothing to do with regulatory scrutiny, or government mandates on eyeglasses. It has to do with perception—how something looks, the way a particular story...

Social Banking: Blessing or Curse?

August 1, 2012
/   Insights

While the topic of Facebook and banking has generated plenty of heat (though not necessarily a lot of light), the debate seems mostly focused on two broad issues: The much-maligned IPO, and the notion...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

Spain’s CaixaBank bills itself as the leading financial group in its market for both banking and insurance. It’s also just become quite interesting for another reason: It claims to be the first bank in Europe to develop and release a Facebook app that allows enables customers to check bank accounts and even conduct transactions via the world’s biggest social network. And just to draw a little more mileage out of the innovation, the institution will also support small donations to specific charities with this method.

All in all, this is a relatively small deal for now, but what are the chances it will get bigger in the near future? Here’s a hint: The bank will soon extend these services to include other operations, such as person-to-person payments, according to the bank. Other institutions are jumping on the bandwagon too: The ‘Pockets’ service from India’s ICICI Bank (incidentally also billed as a first of its kind) lets customers perform a range of services on this platform, from tracking accounts to sending money to ‘friends.’

Moving west a little, the banking industry in Ireland is also watching Facebook closely, but for somewhat different reasons. This is because just this spring, the global behemoth formally applied for a license from the nation’s central bank to become an e-money institution, giving it the power to issue its own currency. What this means exactly is still a little fuzzy, but some see it as perhaps a more legitimate version of Bitcoin. Speculation has it that the company will focus on remittances, a gigantic market in serious need of transformation.

For the record, even a corporation as traditional as Wal-Mart recently launched a service that enables unbanked consumers to transfer money. While that could worry Western Union, it’s likely a niche service for a niche market. Facebook, however, is another beast altogether—with its global reach and instant access, even a minor nudge could shake the foundations of the banking industry.

Facebook’s attempted strides into the financial services industry, however tentative, have been explored on this blog before, specifically with regard to Facebook Credits. That refers to the virtual currency members can use to buy virtual goods in any games or apps of the Facebook platform that accept payments. Even without getting extensive coverage, the practice earned prominent mention in the company’s IPO filing.

More recently, the company appears to have been moving away that strategy and towards money. In fact, it has been quite active for some time now in helping application developers work on payment processes that uses local currencies. In other words, like many good innovators, it has been hedging its best.

But if that’s what Facebook is doing, what are corporations on the financial services side doing to ensure they don’t come out on the losing end?

It’s easy to see why social media in general could be a boon for communications and a headache for everything else. J.P. Morgan, for example, recently fielded hundreds of angry Tweets after putting in place policies to identify potentially risky transactions. The thinking is that in the old days, when customers had to actually go online, or even draft a letter, when making a compliant, there were fewer complaints; now, when it can be done with a few stabs on the smartphone, there are far more coming in, and each expects a response.

Sure, most predictions about user adoption of new technologies turn out to be wrong. We have no idea which innovation will take off, what changes it will induce. But it’s probably safe to say that the army of social media channels, including Facebook, has changed everything, and it will change banking. Facebook is clearly doing its part to speed the process, and some banks are doing theirs. But are there many that should be doing more?

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.