Still Unsure About Retail Consumer Banking Through Social Media? Act Fast or Get Left Behind!
By tushar.chitra on Oct 01, 2013
Picture this scenario: You are on your facebook page, busy ignoring the endless motivational messages and done-to-death jokes shared by your virtual acquaintances. You notice a sponsored message for Lotto shoes at an attractive discount. You have wanted to buy a pair of sports shoes for a while but haven’t actually gone on to take the trouble of hunting for the right pair that suits your requirement as well as your budget. This pair seems just right. However, you’re too busy at that point of time and loath the idea of having to go through the longish steps of online shopping; create an account, add to shopping cart, fill in personal details, shipping address, card details, promo codes and so on. All of this becomes doubly painstaking if you are browsing with your mobile device, with the inherent difficulties of small keypads, inability to open multiple windows and smaller displays. What if you had the option of just keying in “buy” in the comments and your order was placed? Or, if you are on Twitter, all you had to do to buy a product that catches your eye is to key in #buy? That is the future of online shopping. In fact, service providers such as Chirpify are already offering a platform designed to enable in-stream, instant transactions on social media platforms such as facebook, twitter and instagram.
Not only shopping, in-stream payments can be equally convenient for electronic fund transfer. PayPal’s SendMoney app for fund transfer on facebook has been around for nearly two years now. More and more banks now offer apps enabling fund transfer through social media, either through custom-built apps that act as virtual wallets or through internet banking. The convenience factor becomes more pronounced since a significant number of users today browse with mobile devices. And with mobile devices, conducting a transaction while using any social media channel simultaneously is not easy, unless you are using a high-end smartphone or tablet. These apps typically allow you to transfer funds to anyone in your contacts list, with a single click. Azimo, a UK-based company, even allows you to use facebook for international currency transfers, that too, at a much lower fee as compared to traditional money transfer services.
So, if conducting financial transactions through social media is such a godsend, why is that most banks across the globe have been circumspect in adopting this practice? The answer is simple enough-security, compliance and privacy. Security is probably the biggest concern, with the perception that social media sites are vulnerable to hacking and compromise. While conducting a transaction through a facebook-based wallet, the security certificate you see is for facebook. So the question arises: who’s liable in case of fraud-the bank or facebook? And how can you be sure if the banking app you are using is genuine or not? Banks and payment service providers are trying to overcome this by introducing measures such as multi-factor authentication. But introducing an additional step negates the convenience aspect, at least to some extent.
Privacy of data is another valid concern. Admittedly, many of us are uncomfortable with the intersection of our social and financial networks. We may not really want our acquaintances to know how much we have spent, or what we have purchased. Your preferences being transmitted to the public would also mean that you become a target for contextual advertising and spamming.
Finally, regulation and compliance, which is still a grey are as far as banking through social media is concerned. How will banks meet KYC requirements and ensure privacy of customer information, what about local regulations in case of cross-border transactions, liability in case of fraud and so on.
These caveats aside, if you are one of those who are firm about not using social media for financial transactions, be aware that a few years back, there was a substantial number of those who would “never use mobile devices for banking” and in all likelihood, now they would hardly ever be using anything other than that very mobile device for all financial transactions. Banks that are still adopting the wait-and-watch approach will have to accept that this is not a passing fad, or else non-traditional players will establish a foothold in this nascent but attractive space.
This is a space to watch out !