Why The Facebook Bank May Be Some Years Away

Offering financial services might seem an obvious next step for social media giants, particularly given the advent of Open Banking. However, British people are still hostile to the idea of running their finances through social media, a new Consumer Intelligence study has shown.

It has been almost a year since banks were forced to open up customer accounts to partners that their customers select, meaning that third parties can offer financial solutions to customers.

But customers remain sceptical, even when it comes to sharing banking data with the social media groups they use regularly, the study shows.

Consumer Intelligence surveyed 2000 respondents, and found that 99%of them used some form of social media, with the most common being Facebook (used by 87% of respondents) while 62% used WhatsApp.

Which social media do you use?

Despite this regular use of social media, many respondents were still worried by the safety of their data — which seems to be leading to a reluctance to share financial data with social media businesses.

How confident are you about the safety of your data?

Would you consider allowing a social media site such as Facebook to have access to your financial data if they offered banking services?

However, the survey reveals that some age groups are more likely than others to be willing to bank with social media giants. Almost a quarter (21%) of 24-35 year olds would consider this, against 9% of 35-44 year olds and just 3% of 45-54 year olds. The youngest age group surveyed, however - those aged 18 to 24 — were as sceptical as the older generations, with just three per cent prepared to bank with social media giants.

For those who are willing to entrust their banking to high street social media names, the top reasons are convenience and better offers of financial services products.

Why would you allow a social media company to see your bank details?

However, for those who said that they would not allow it, lack of confidence in data security is a major drawback.

Those who specified other reasons mainly talked about lack of trust, with many respondents specifying security issues as their main concern.

A year after the launch of Open Banking, the study revealed that there are still a large number of people who are not taking advantage of third-party apps. Just 6% had allowed a third-party app, such as Cleo or Mint, access to their bank account.

Again, there was a significant generational difference in who does and who doesn’t use Open Banking. 15% of those aged 18-24 had allowed a third party app access to their bank account, and the percentage rose to 20% in those aged between 25 and 34. The percentage then dropped significantly to 8%, 2% and 1% in the next three age bands.

14% of all respondents said that they might consider using an Open Banking application in the future, while there was again a bias towards younger people being more interested in this technology. A further 16% of those aged between 25 and 34 said they would consider using it in the future, compared with 10% of those aged between 45 and 54.

Andy Buller, banking expert at Consumer Intelligence, said that the findings are significant for social media groups, other financial services apps, and high street banks alike.

“Social media has become a significant part of our lives. We happily share a great deal of data with companies such as Facebook, Whats App and Google,” he said. “With some of these companies already offering payment options, a move into financial services looks like an obvious next step.”

“However, when offering these accounts the companies involved will face inevitable barriers from consumers — the biggest being suspicion over what will happen to their data.

“Open Banking — which allows customers more control over who sees their data — is still in its infancy and is not yet widely understood, which is adding to customer reluctance.”

However, Mr Buller added that Consumer Intelligence’s study showed that high street banks should be concerned about the possibility of third parties, including social media giants, eventually taking market share from traditional banks.

“Younger people, in particular, are more open to the world of Open Banking,” he said. “Ultimately, the desire for convenience is likely to trump suspicions over sharing of financial data — particularly considering the large amounts of other data that we are prepared to share with social media giants. High street banks should be on their guard and consider how best to work within the changing landscape that Open Banking is already bringing.

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