Facebook has been reaching out to banks trying to make deals for information. What does this mean for clients?
In light of recent controversies surrounding Facebook, one might think that the tone of such reportage as brought forth by the Wall Street Journal in this article would by hysterical or disconcerting. But it wasn’t. This is apparently where the world is headed.
Facebook has been reaching out to banks trying to make deals for information “including card transactions and checking account balances, as part of an effort to offer new services to users.” Zuckerberg apparently wants to turn his media giant into a marketplace platform as well. Armed with the purchasing data of their customers from banks, this would be relatively easy to accomplish. Marketing is all about information.
“Facebook has been reaching out to banks trying to make deals for information ‘including card transactions and checking account balances, as part of an effort to offer new services to users.’ ”
It’s hard to see how this won’t lead to further controversy for Facebook. Whatever the facts are, this will look Orwellian from a populist perspective. If Facebook gets their way, essentially banks will be given access to their own customers and potential new customers through the platform. For example, one of the banks they have reached out to is Chase. Chase customers who are on Facebook would theoretically be able to do things like access “checking-account balances… It has also pitched fraud alerts.”
In other words, Facebook gets marketable data on its users and the banks get access to their own clients, and of course potentially new costumers. Prima facie, this seems like a pretty bad deal for banks and a really good deal for Facebook. It would be one thing if Facebook were just another facet of the internet. But the web has been around for a while and banks have apps, sites, etc where loads of people do their banking.
“Facebook gets marketable data on its users and the banks get access to their own clients, and of course potentially new costumers.”
But this just isn’t good enough anymore when you consider that online commerce is dominated by PayPal and Square. Economic defeat in the free market is most devastating when obsolescence is the problem. One company may produce a better product but purchasers are not rational actors. They just buy what they buy and there often isn’t a good explanation for why they pick Tide over Amway. But if your business is about building buggies to be drawn by a horse and then some jerk like Henry Ford comes along and invents the car, well your business has just entered into an extinction cycle. Unless of course you can change your business to adapt to the new technological pressures. But that is remarkably hard and expensive.
And banks are starting to feel the technological pinch. One might think they’d jump at this chance. The problem is that they know customers will view this as a privacy issue and if they simply give away their information to a company, especially one viewed unfavorably right now, this will hurt their public image and probably lose them customers as well.
Speaking on behalf of Chase, Trish Wexler said they would not be “sharing our customers’ off-platform transaction data with these platforms, and have had to say no to some things as a result.” Unfortunately, their principles may cost them in the long run. Principles have a funny way of doing that.
Whatever ends up happening, the WSJ’s clickbaity title is essentially accurate “Facebook to Banks: Give us your data, we’ll give you our users.” Which is further evidence for the now infamous observation, ‘If you’re not paying for something, you’re not the customer; you’re the product being sold.’ We literally pay for the free things on the internet with something much more powerful than money. We pay with ourselves. The cost of that has yet to be seen.
A.C. Gleason earned his MA in philosophy of religion and ethics from Talbot Seminary. He is a regular contributor to The Federalist. Follow him on Twitter @ac_gleason.