Why Facebook is the “dark horse” of the financial services industry

The author of the material , translated by our team of processing company PayOnline , attempts to predict the future development strategy of the popular Facebook Messenger application.

For an outside observer, the financial services industry is mostly banks, public financial institutions, fintech startups, and perhaps, to some extent, an ecosystem that provides growth for start-ups themselves (business incubators, accelerators, sandboxes, venture capital, etc. .). But those who know about the industry not only from the headlines of popular press releases, constantly hear very different names and names, which so far are not associated with finance. We are talking about large technology companies that have never before been considered part of the financial services industry. They are familiar to consumers as technology innovators, creators of PCs and Macs, giants of the social media industry.

Despite the fact that these companies are known to all and are quite open in the financial environment, they often prefer to work in secret. Take for example the largest social network of all time - Facebook. The company had and has big plans for its Meccanger, and specialists from various industries naturally began to be interested in the growing commercial potential of the former chat.

When did Facebook launch its grand plan and why did it become important right now?

Someone thinks that one of the reasons why recently we have been hearing about the Meccanger more often is to achieve the critical mass of users needed to start monetization. In 2014, Mark Zuckerberg said the following: “We have a clear strategy for the next few years: we must focus on growth and connect all people in the world with each other. <...> As soon as we become a service for 1, 2, 3 billion users, we will have many clear opportunities for monetization. ”
')
Staying true to its strategy, Facebook in 2015 reached 800 million users monthly and approached 1 billion, where the most interesting things should start. As Forbes previously reported , in 2016, Facebook planned to turn its MecSender into an “app for everything”, giving users access to almost all types of business and services directly from the app. At the same time, other applications should eventually become a thing of the past (along with the phone numbers that we need today for contacting other people).

In January 2016, David Markus, vice president of Facebook for instant messaging products, told in his blog about significant events in 2015 and shared his forecasts for 2016 - all in the form of infographics:



One of the most important parts of this infographic (not counting the magnificently growing capabilities of Messenger) is part of the trends. At first glance, frivolous, it actually says that Messenger is a prototype of a tool for effective business interaction with customers and, possibly, a new technological breakthrough in the field of financial services.

Meccager is no longer to be considered solely as a means of communication or a common element of a social network. This is much more, and the company showed it by separating the Meccager from the main platform, constantly expanding its capabilities and complementing the development concept.

I wonder how David Marcus described how the company sees the future of Messenger: “We are witnessing a change in the interaction paradigm. We are thinking about how to help you in contacts with business and service providers — help with purchases (and with repeated purchases too), with ordering a taxi, purchasing air tickets. How to make communication with customer support pleasant and hassle-free. All this is much easier to do in a single application that stores the history of your previous actions and your data. You no longer need to log in to individual services, you do not need to download applications that you will never use again and with which you have to jump from one to another. ”

Looks like Facebook does have a big plan.

To be precise, the history of creating an all-in-one application, which should make contacts between customers and business, began some time ago with interesting acquisitions. Back in 2012, Facebook was joined by the team and the startup Tagtile, which specializes in managing customer loyalty on mobile platforms. Later that year, the company swallowed up Karma, a mobile commerce startup that specializes in apps that allow friends and relatives to make presents. According to TechCrunch, the purpose of the new acquisition of Facebook was the development of monetization tools on mobile platforms. This was followed by the purchase of a shopping search engine with The Find personalization.

If you consider that 4 out of 10 (39%) adult users who have an account on social networks, seeing information about purchases and leisure of friends, begin to think about purchasing similar goods and services, Facebook has every chance to become a priority tool for retail and e-commerce.

With regard to the commercial appetite of Facebook, it is no secret that the company is open for cooperation with everyone who works with payments. As Mark Zuckerberg said in January of this year: “We will cooperate with anyone involved in payments. We look at what Apple is doing with Apple Pay, as an excellent innovation in the area where there is a big movement around transactions. ”

How does all this relate to finances?

Thus, Facebook does have ambitious plans for Messenger as a commercial mechanism, but what does this have to do with banking and why is it important for banks as a whole?

Messenger as a mobile wallet

First of all, because Messenger intends to become a sort of “single window”. In the long run, this means that Messenger can turn into a mobile wallet with a very advanced AI-based personal assistant (maybe this will be M - a personal assistant from Facebook?), Able to fulfill all types of requests and make payments if necessary.

In addition, there are no barriers to adding various financial products to Messenger. If the chat bot Messenger can find and recommend a “red sweater with high throats”, it can be just as useful in looking for a loan on specific conditions and for specific purposes voiced by the user. In the end, in the beginning of 2015, Facebook acquired the Wit.ai speech recognition technology start-up . Using the speech interpreter application Jibbigo, acquired by Facebook in August 2013, you can implement this function for different countries and languages.

Messenger as a PFM platform

It is likely that Messenger will become the PFM application (personal finance management application) of the new generation. Today it is easier to organize access to personal banking information for third parties. A huge number of fintech solutions built on this. It's about access on demand and connecting credit and debit cards. An AI-based personal assistant could retrieve data at the user's request and display it in a visual form, as any modern PFM platform or application does. And since Facebook acquired Onavo, a startup that specializes in data analysis, in October 2013, the company certainly has the necessary personnel to extract valuable data from personal financial information.

One of the latest examples of customer service through Messenger was demonstrated by the Canadian TD Bank Group, which in April of this year became the first bank in the world to offer customer service through Messenger Facebook (starting in December). Despite the fact that we are talking about customer service in its classic sense, this is a step towards providing financial services through Messenger. TD Bank has integrated Messenger into its service system because of its simplicity. Using Messenger, customers can get advice on the main product and information on their accounts.

Notifications are another option for tracking personal expenses. Messenger can be a tool by which banks will inform customers about transactions, changes in user agreement, customer service terms and other important information.

Messenger as a new generation tool for market loans

But let's move from passive services, such as PFM, to something more interesting - the possibilities for Messenger to become an alternative solution for loans in addition to all that he can do now. Facebook has enough financial and human resources that can be invested in creating an extensive partner network of banks and financial organizations to integrate data on available financial products directly into Messenger. Facebook has three advantages that will enable Messenger to become a marketplace for financial products:

1. Facebook has a huge amount of data on each user, his interests, preferences and the specifics of the “ digital behavior ”;
   
   
2. Messenger is close to 1 billion users, which means that there will be no shortage of people willing to lend money through the Facebook platform as part of the peer lending system if Facebook implements this option, and not lending at the expense of partners;
   
   
3. Having access to bank accounts, Facebook will be able to assess the creditworthiness and financial stability of users and will be able to carry out a more accurate calculation of the conditions for obtaining a loan.

AutoGravity is a digital marketplace for car loans. Most recently, AutoGravity presented its project at the FinDEVr 2016 conference in Silicon Valley. AutoGravity works with banks and financial companies, as well as proven car dealers, and thus gives users the ability to quickly get real car loan options through their platform.

It is important to note that the platform provides an accurate assessment of the terms of the loan with the possibility of "booking" of any of the four options offered. As soon as the user makes a choice of the most suitable option, he receives the code, which is then used in the partner auto show to auto-fill the contract. A few minutes - and you can go home in a new car, bought with a loan, the terms of which are focused on a specific user.

Similar to AutoGravity, Messenger can build its own network of financial companies, banks, car dealerships, real estate agencies and others to offer real deals based on information that users will communicate to the built-in chat bot, for example, answering the questions needed to get an individual offer. . In addition, P2P lending can be a good option if you take into account the base of 1 billion users.

The point here is not that Messenger will force banks out of the market. The point is that if the bank starts to provide its services in a more efficient way through convenient automated information channels, the user will no longer need to contact the credit institution directly.

Of course, it will take time for customers to change their habits, especially since banks will always play on the image of professionalism, security, stability and security of operations. But if banks still decide to promote a new way of providing financial products, this can lead to good results, both for them and for customers.