Facebook National Bank? It Could Happen

6 Jan

This post also appeared on IQ Interactive’s blog.   

Think forward a couple years. Is it possible your debit card will be from the Facebook National Bank? What about that proof of insurance in your car, will it be from LinkedIn National?

Laugh if you will, but there’s good reason to see banking and insurance in the near future for social network. Gartner Research analysts dig in deep on the possibility in their industry predictions for 2012. Actually their prediction is that at least one of the social networks, likely Facebook, would be active in the financial services field by 2014.

So what’s going to move Facebook from global water cooler to financial services giant in just two years? You. Well, actually you and the other 800 million users who are laying bare your lives.

You can’t be surprised, are you? How many bankers would kill to know when their customers have a baby, change jobs, get married or divorced? What insurer wouldn’t want customers to waive their hands up high every time their life situation changed, they moved or started thinking about a new car?

It’s all there on Facebook (and to a lesser extent on sites like Twitter and LinkedIn), eagerly supplied by users who want to hear what their friends have to say. If ever there was proof that the time for study social media has passed, this is it. This is why it is imperative that every company should have or be working on a comprehensive digital strategy that includes all your digital touch points.

And the most bitter of ironies, is that banks will help Facebook get there. They already are. Between creating pages on Facebook, posting albums on Flickr and answering tweets from consumers, financial institutions have demonstrated time and again the attraction of social interaction with the companies holding our money.

Does it all seem a bit far-fetched? IQ Interactive’s own Zach Pousman points out how credit bureaus like Equifax and Transunion have been caught flat-footed by Credit Karma. While the credit services are busy trying to sell consumers access to their scores and credit files, Credit Karma is giving it away. So far 4 million people are more than happy to be confronted with ads in exchange for free access to their credit data.

Indeed, the desire to have ads better tailored to their needs has led more than 5 million consumers to share their bank account numbers, credit card accounts and even mortgage information with Mint.com. It’s no surprise as Forrester research has repeatedly shown that consumers, especially those under 35, are far more likely to share financial data online if it gets them something of perceived value.

Facebook is already moving to disintermediate banks in particular. Items are bought and sold through online games, parents buy their kids cards with Facebook Credits, even Citi bank has created a tool so users can conduct transactions without ever leaving Facebook.

Now it doesn’t seem so far fetched does it?

As for insurers, ponder this – how will their business change when customers can poll their friends for the prices they’re paying for car insurance? Think back on the upheaval that happened when Progressive started offering competitive quotes from other insurers when customers called to get a quote.

The Gartner report goes so far as to advise insurers to prepare for the commoditization of their products. How’s that for season’s greetings?

Then there’s this bit to keep in mind. Google and Microsoft aren’t likely to sit back and idle their engines while Facebook seizes vast new revenue streams. So figure the field will fragment quickly as other online giants jump into the fray.

There are of course massive issues that this will raise, not the least of which are regulatory concerns. But who’s going to be willing to wait on the sidelines when the land grab begins?