In this segment from MarketFoolery, host Chris Hill and senior analyst Jason Moser consider the somewhat baffling news that Facebook (FB 0.82%) is talking to banks about a payments feature that would have your bank data automatically accessed by its Messenger app.
The company says the information wouldn't be used for targeted advertising, and perhaps the social media specialist is sincere in thinking that it could use this to simplify online purchases or money transfers between people. But given its recent failures in the realm of trust, this proposal seems particularly tone-deaf. Does it have a chance of gaining traction?
A full transcript follows the video.
This video was recorded on Aug. 6, 2018.
Chris Hill: The Wall Street Journal is reporting that Facebook is talking to banks about a new feature that would incorporate your bank information to Facebook Messenger. This reportedly would only be in Facebook Messenger, this would not be on the larger Facebook platform. No, thank you.
Jason Moser: Yeah, because I totally trust what these guys are doing.
Hill: [laughs] I said this to you earlier when we were chatting about this, I saw this headline in my Twitter feed when I was multitasking this morning, and my in-the-moment reaction was, "That can't be real!"
Moser: It sounds so absurd!
Hill: One of the things we've talked about, on Market Foolery and on Motley Fool Money, about the privacy challenges that Facebook has undergone over the last six to 12 months. One of the things that you've said, Matt Argersinger has said this, and others, is, "Well, among other things, this is going to really pump to the breaks on payments," because Facebook was interested in getting into payments, and this was really going to pump the brakes on that. It appears that maybe it has, in terms of, this is not a direct payment platform, they're not launching their own challenger to PayPal, but, my goodness, this seems tone-deaf.
Moser: I can just see the discussions going on in the Wells Fargo executive suite. They're like, "Alright, guys, it's been a tough couple of years. When it comes to losing our customers' trust, we're batting a thousand. Something has to change!" Then, some executive in the back corner is like, "I have it! Let's share our data with Facebook! That'll work!" Like you, I had to look at my watch here really quick to make sure I had the date, because it seemed like an April Fool's joke.
I'm not so naive as to believe that data isn't basically accessible at anytime, anywhere at this point. Any party, nefarious or otherwise, is looking for it and can get it. I understand that. I'm also not so naive as to believe that Facebook wants to use this data to make people's lives better. I don't think they're doing this in the name of making your life better. That's my ultimate problem here. They're talking out of both ends. They talk about the fact that they're not going to use this to target ads for their users or whatever. That's BS. That's their entire business model to this point. That's their entire business model, to take data and serve you ads. That's what they do.
And I'm not begrudging that, that's fine. I'm not going to be a part of it. I don't use Facebook or Messenger or any of that stuff. One of the best things I ever did was completely deleting my existence from their platform, because I don't trust them as far as I can throw them. Zuckerberg and Sandberg together. I can't throw them probably two feet, Chris. I don't trust them at all.
For me, banks would be very well served to say, "Thanks, but no thanks." To my mind, when it comes to money, for most people, money is one of the most important things, if not the most important thing. There's health and happiness and all that, but money is a way to get you a lot of those things in some way, shape, or form. So, when it comes to money and finance, privacy matters a lot. We need to make sure that we're being protected.
I'm not saying everybody is doing a great job of doing that. But this is so outside of Facebook's wheelhouse, they shouldn't be fiddling with this at all. I can't imagine this ends well. Perhaps this is something where they're putting the feelers out there and they ultimately decide not to mess with it. But if I'm a big bank, I'm saying, "Thanks, but no thanks, you guys go figure this out somewhere else."
Hill: I understand it from Facebook's side of things in this regard -- they're dealing with engagement that is dropping. They are looking for greater ways to use Messenger. I understand the genesis of this idea. To your point about trying to make people's lives better, it's pretty easy for me to imagine someone at Facebook saying, "Here's how it makes people's lives better, it simplifies any sort of payment process." So, I understand that.
But, to the point you were making about the banks, that's the part I don't really understand here. Are banks so hard up for data? That's ultimately what they would get out of this. Forget Wells Fargo, if I'm any bank, I'm looking to optimize my own bank's app experience. I'm looking to make my website as secure and streamlined as possible, same for my app. That's it, to me, unless I'm really struggling.
Moser: I think what you're saying makes a lot of sense. I don't think this is something that Facebook can do better than companies that already exist today are doing. I don't know why this would prompt someone to discontinue using PayPal or Square and go over and start doing all of this stuff on Messenger.
To that end, when it comes to big banks, big banks all have a lot of data. I think big bank's data is far more meaningful, because that's actual, in-stone data. You made this purchase at this time from this place. On Facebook, maybe you liked something or scrolled through something, or you qualified as an engagement metric for a specific ad that you scrolled through. It's less concrete. Banks have more concrete data and ways to use that data.
Perhaps it's just a matter of a changing the of the guard there, from older executives to younger, more tech-oriented executives. I think that's why PayPal and Square are companies that are going to really help dictate this next decade and beyond when it comes to finance and purchase behavior and whatnot, because those are businesses that are built on the foundation of data and using that data to actually make consumers' lives better. That, to me, is just so far outside of what Facebook does.
And I'm not saying that to dog Facebook. Facebook is obviously a very big company. They've done a lot of things right to this point. It's a $500 billion company, something like that. But, I just don't understand why any consumer out there would give them the benefit of the doubt, to trust them with their finances. I don't consider it naive on my part, either. I embrace technology, for the most part. This is just so far outside of their wheelhouse, I just don't understand how they gain any traction here. But, I've seen crazier things, too.
Hill: I think it's a sign that maybe you and I are out of step with people who are trading shares of Facebook today, because the stock is up nearly 4% on this news. [laughs]
Moser: Well, Chris, let's just always remember that in the short run, the market is a voting machine. But in the long run, it's a weighing machine, and we're looking to weigh our companies, so we'll focus on the longer haul.
