Facebook Wants to Be Your Online Bank

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By LAUREN BARACK


FORTUNE -- Someday soon, Facebook users may pay their utility bills, balance their checkbooks, and transfer money at the same time they upload vacation photos to the site for friends to see.

Sure, the core mission of the social media network is to make the world more connected by helping people share their lives. But Facebook knows people want to keep some things -- banking, for example -- private. And it wants to support those services too.

"There are certain things, whether itʼs financial services, or banking where I donʼt necessarily want my friends to know exactly what Iʼm doing, right?" David Robinson, Facebook's director of global marketing solutions, U.S. financial services, asked a crowded room of bankers at a Securities Industries and Financial Markets Association (SIFMA) seminar in New York late last month. "I want to be able to go in and have an experience with my advisor or my bank and have that be a one-on-one experience."

Facebook is quietly planning just such an offering with Australia's Commonwealth Bank. Currently in an internal beta, with the first version built in March, the application is expected to launch sometime this year to customers. It will allow Facebook users who are bank customers to make payments to third parties as well as Facebook friends through the social media channel, according to the bank. Commonwealth will secure transactions with its own authentication system -- similar to how payments are secured on its online and mobile banking site, a spokesperson says.

Facebook declined to comment specifically on the banking push. But Robinson is clearly communicating to the banking community that Facebook (FB) hopes other financial institutions will follow. The hope is that by creating private experiences on social media's normally very public channel, banks can better engage customers, not to mention drive more traffic to Facebook, and open the doors to other avenues where the company can monetize its platform.

Commonwealth won't be the first institution to enable financial transactions on Facebook. Facebook's former chief privacy officer Chris Kelly is an advisor to Loyal3, a startup that allows Facebook users to buy fractions of shares in companies they love, and to share that on Facebook. Loyal3 launched the program earlier this year with Fifth & Pacific Companies (FNP), the publicly-traded owner of Juicy Couture, Kate Spade and other fashion brands.

But while Loyal3 assumes consumers will want to share the fact that they're fans of a brand, the banking community knows that most personal financial activities are inherently private. And here Facebook is encouraging financial institutions to enable activities, like banking, with full knowledge that they won't be shared, but they will still be ways to potentially broaden Facebook's network and keep people engaged on the site longer.

Currently, just 16% of a brand's fan base actually engages with a company's Facebook page, notes Robinson. So finding other ways for users to interact with brands on Facebook could help Fortune 500 firms that are looking to grow their social media presence, while of course helping Facebook grow as well.

There are risks such as spam messages that could look like a friend in trouble, prompting users to send money through their Facebook app. But Commonwealth Bank says it won't launch the app unless it can offer customers a 100% guarantee of security, a spokesperson says. Plus scams like these are inherent to any virtual medium today, and unlikely to deter the Facebook user who finds banking from the social channel a time saver.

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Facebook Wants to Be Your Online Bank

Oct. 28, 2003: Mark Zuckerberg hacked into restricted areas of Harvard University's computer network to create Facemash, a website that pulled the private dormitory ID photos of students, then asked users to compare the pictures of two random students and chose which one was better looking. For the brief period before university administrators shut it down, it proved quite popular.

January 2004: Zuckerberg began to write the basic software to create a universal Harvard social directory, TheFacebook.

Jan. 11, 2004: Zuckerberg registered thefacebook.com domain. Then, on Feb. 4, TheFacebook launched at Harvard University. Mark Zuckerberg, right, and Dustin Moscovitz, co-founder, left; took a semester off in 2004 to further improve on TheFacebook website.

March 2004: Initially restricted to Harvard students, TheFacebook expanded to other colleges, including Stanford University, Dartmouth College, Columbia University and Yale University.

April 13, 2004: Zuckerberg, Dustin Moskovitz, and Eduardo Saverin formed Thefacebook.com LLC, a partnership.

June 2004: TheFacebook moved it's headquarters to Palo Alto, Calif., and received an investment of $500,000 from Peter Thiel.

June 2004: Thefacebook incorporated into a new company, and Sean Parker, a co-founder of Napster, took the job of president for the growing business.

September 2004: Facebook replaced its "User is..." prompt with a "What's on your mind?" question in the newly designed space for posting and sharing status updates called "The Wall." 

September 2004: Harvard students Cameron Winklevoss and Tyler Winklevoss of ConnectU filed a lawsuit against Zuckerberg and other Facebook founders for allegedly stealing their idea for a college social network called HarvardConnection.

July 19, 2005: Then-dominant social networking site MySpace was acquired by News Corp., spurring buzz on the Internet about the possible sale of Facebook to a larger media company.

Aug. 23, 2005: TheFacebook dropped its "The" and became Facebook. Purchase price it paid for the Facebook.com domain name: $200,000.

September 2005: Facebook added networks for high school students.  In December 2005, Facebook reached 6 million users.

2005:  Artist David Choe began painting murals at the headquarters of Facebook in exchange for company stock. Today, the shares he received are worth an estimated $200 million.

2006: A cash flow statement was leaked showing that Facebook had a net loss of $3.63 million for the 2005 fiscal year.

Sept. 26, 2006: Facebook removed its restrictions and allowed anyone 13 and older with a valid email address to join.  A news feed and a mini-feed were introduced, providing easier ways to see what your friends are up to.

May 2007: Facebook Platform launched with 65 developers and more than 85 applications.  Third-party developers quickly followed, building applications to integrate with Facebook. Games such as Farmville and Mafia Wars spread rapidly.

July 25, 2007: A federal judge gave twin brothers Cameron (left) and Tyler Winklevoss, founders of ConnectU, and Divya Narendra until Aug. 8 to flesh out the allegations in their lawsuit against Mark Zuckerberg. Those charges  included fraud, copyright infringement and misappropriation of trade secrets.

December 2007:  Facebook reached 58 million users. With the successful addition of Facebook Platform and video, growth remained strong.  Facebook charted a course toward becoming a general portal like AOL; meanwhile, the choice was made not to aim toward being acquired, as   MySpace.com, YouTube and so many other tech startups were.

June 2008: Facebook settled two lawsuits, ConnectU vs Facebook, Mark Zuckerberg et al. and intellectual property theft, Wayne Chang et al., over The Winklevoss Chang Group's Social Butterfly project. The settlements effectively had Facebook acquire ConnectU for $20 million in cash and Facebook shares valued at $45 million, based on a $15 billion company valuation.

July 2008: The first Facebook iPhone app was released.

August 2008: News broke that some employees reportedly privately sold their shares to venture capital firms at prices that gave the company an implied valuation of between $3.75 billion and $5 billion.

October 2008: Facebook set up its international headquarters in Dublin, Ireland.

February 2009: The "Like" social plug-in was added, allowing users to follow status conversations without having to say anything.  The like button was instantaneously a hit. It's initial purpose has been widely misinterpreted as a positive approval button.

August 2009: Facebook acquired FriendFeed, a real-time news aggregator.

September 2009: Facebook said that its cash flow had turned positive for the first time.

April 2010: Facebook announced the acquisition of photo-sharing service Divvyshot, and introduced Community Pages.

May 31, 2010: Quit Facebook Day was an online event where users vowed that they would quit the social network shortly after widespread criticism was received on the new privacy controls rolled out in mid-May.  Zuckerberg publicly admitted the company had "missed the mark."  An estimated 33,000 users quit the site.

June 2010: Facebook employees sold some shares on SecondMarket at prices giving the company an implied valuation of $11.5 billion

August 2010: Places launched, allowing users to share information about where they are in the real world, so friends can find each other.

Oct. 1, 2010: The Social Network, a film about the start of Facebook, was released to theaters. The film, directed by David Fincher, was met with widespread critical acclaim and won the Golden Globe and Critics Choice Best Picture for the Year. Mark Zuckerberg stated that the film is an inaccurate account of what happened.

November 2010: Facebook added features to its mobile software for Android devices. The number of users reached just short of 608 million, with mobile traffic increasing.  

December 2010:  TIME magazine named Facebook founder and CEO Mark Zuckerberg the 2010 TIME Person of the Year.

January 2011: Equity investors put $500 million into Facebook for 1% of the company, placing its implied value at $50 billion.

February 2011: Facebook added 'Civil Union,' and 'Domestic Partnership' to its Relationship Status options.

February 2011: Facebook application and content aggregator Pixable estimated that Facebook would host 100 billion photos by summer 2011.

June 2011: Facebook partnered with Skype to add video calling as well as a new group chat feature.

September 2011: Heroku joined forces with Facebook for application development using the Facebook Platform.

Sept. 22, 2011: Facebook debuted the new Timeline user interface at the F8 Convention.

October 10, 2011: Facebook launched its iPad app.

December 2011: Membership reached 845 million users.

December 2, 2011: New York Mayor Michael Bloomberg (left) Facebook Chief Operating Officer Sheryl Sandberg (center) and Sen. Charles Schumer (D-N.Y.), react during a news conference on the announcement that New York will be the center of Facebook's new engineering technology initiative.

December 22, 2011: Facebook launched the new profile user interface, Facebook Timeline.

January 24, 2012:  Facebook announced that  "Timeline" would become mandatory for all users.

Feb.  1, 2012:  Facebook filed paperwork to go public, seeking to raise $5 billion on Wall Street in the largest flotation ever by an Internet company.

March 6, 2012:  Facebook launches Messenger for Windows, which gives users of Windows 7  Facebook services without the need for a web browser.

April 9, 2012: Facebook announced that is will acquire the photo-sharing app Instagram for $1 billion USD.

May 18, 2012: Facebook founder, Chairman and CEO Mark Zuckerberg, center, rings the opening bell of the Nasdaq stock market from Facebook headquarters in Menlo Park, Calif. The social media company priced its IPO on Thursday at $38 per share, and beginning Friday regular investors will have a chance to buy shares.

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And while Facebook may be encouraging banks to open virtual outposts today, other industries will likely also be interested in creating a private walled garden on the platform. Sure, people are coming to Facebook to share their vacation photos with pals. But why not collect their paycheck, buy medical insurance or pay the IRS there as well?

The company makes no bones that it sees itself as a channel where users supply content with Facebook acting solely as the conduit. However, touting itself as a place for privacy is an unusual marketing pitch from social media's grand dame. And it's one that officially Facebook won't officially acknowledge.

"Facebook is a platform and a partnership company," the company said in a statement when asked if other financial institutions would be opening virtual branches on Facebook soon. "We are supportive of brands and agencies, across industries, using the platform to better serve their customers."

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