Facebook began beta-testing the banking app in March, and it's expected to go live sometime later this year.
With so many people already connected via Facebook, offering a banking option may just be a logical next step. And if it succeeds, the Facebook banking app could change how people conduct transactions online.
The new Facebook app would not only allow users to conduct secure transactions with their bank, but also would enable payments to third parties and Facebook friends.
So members of the social media network who adopt the Facebook banking app will be able to pay their household bills and balance their checkbook in addition to the usual Facebook activities like uploading photos and updating their status.
Facebook Answers Security Concerns While Facebook was built on the foundation of bringing people together and keeping them connected, it does recognize there are some things people would rather not share - personal finances chief among them.
That's a hurdle Facebook is determined to overcome as it plans to add banking to its roster of site activities.
"There are certain things, whether it's financial services or banking where I don't necessarily want my friends to know exactly what I'm doing, right?" David Robinson, Facebook's director of global marketing solutions said in June to an audience of bankers at a Securities Industries and Financial Markets Association seminar in New York.
Facebook's answer lies with its banking partner (or future partners, if the idea gets traction). Commonwealth Bank will secure all transactions with its own authenticating systems, similar to how it secures online payments on its own online and mobile banking site.
Facebook would like for the Commonwealth banking app to serve as a model other financial institutions could follow.
"Facebook is a platform and a partnership company," the company said in a statement in response to a query about the possibility of other financial institutions opening virtual branches on Facebook. "We are supportive of brands and agencies, across industries, using the platform to better serve their customers."
By creating private experiences on what is normally a very public channel, Facebook hopes to expand its own reach while helping banks better serve and engage their customers.
Risks of Facebook Banking Commonwealth is aware of risks involved, particularly "phishing scams" in which messages that appear to be from a distressed friend trick users into sending money to a thief. But the Australia-based bank insists it will not launch the app unless it can do so with a 100% guarantee of security.
Scams of this sort are older even than the Internet, and would hardly be unique to the Facebook banking app. With such cons rampant in the online world, it's likely veteran Facebook users are prepared to deal with those risks.
Now that a Facebook banking app is on the way, one can easily imagine other financial services in the near future. Your paycheck could be sent directly to Facebook, for instance. Other apps could allow you to buy medical insurance, or even pay your taxes to Uncle Sam. Loans, mortgages and brokerage services could be on the horizon as well.
"With such a move, Facebook aims to not only improve engagement on its platform by offering private services, but also generate additional revenue streams by throwing different services like this on the wall and seeing what sticks," research firm Trefis observed on its Web site. "While Facebook may not be looking to monetize this right now, it may eventually figure out a way to monetize the users who use its banking platform."
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Tags: Commonwealth Bank, Facebook (NASDAQ: FB), Facebook banking app, online banking, online banking app, personal finances, Social Media