According to The Wall Street Journal, Facebook Inc. (FB) is seeking to acquire financial data on its users. The social media company has reportedly asked U.S. banks to share financial information about their customers, including checking-account balances and card transactions. The information would be used to offer new services to Facebook account holders.
The petition, which went out to many of the largest banks across the country, is sure to draw criticism from many interested in retaining data privacy, particularly in an area as sensitive as personal finance.
Facebook as Marketplace
Although Facebook began as a social hub in which users could connect with friends, it has increasingly aimed to become a platform in which users can buy and sell goods and services. The WSJ reports that Facebook made inquiries to JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), Citigroup Inc. (C) and U.S. Bancorp (USB) in the past year to determine whether potential offerings for bank customers on Facebook Messenger might be possible.
The social media titan has reportedly put forward a proposed feature that would allow users to see their own checking-account balances through the platform, as well as fraud alerts that could be delivered through Facebook as well.
Data Privacy Concerns
The primary concern among many banks and individual customers with regards to Facebook's latest attempts at expansion is data privacy. According to the Journal, at least one large U.S. bank pulled away from talks with the company as a result of privacy concerns. Facebook is currently facing multiple investigations related to its ties to Cambridge Analytica, the political analytics company that accessed data on up to 87 million Facebook users without their consent.
From Facebook's perspective, the company believes that more customer information means more targeted efforts at engaging its user base. The company is aiming to boost user engagement, particularly with its Messenger service, after Facebook lost more than $120 billion ins market value in a single day earlier this summer.
Facebook has promised that it will not use the bank data for any ad-targeting purposes or in communications with third parties. Spokeswoman Elisabeth Diana has said "we don't use purchase data from banks or credit card companies for ads. We also don't have special relationships, partnership, or contracts with banks or credit-card companies to use their customers' purchase data for ads." Facebook likely hopes to capitalize on the pressure that big banks are experiencing to develop partnerships with large online platforms to reach more customers digitally.
When news of the potential partnerships became public, Facebook shares increased by about 3.5% through midday. This marks the largest gain since the rapid drop in July.