Facebook could become your new bank, according to a financial technology firm that is calling on traditional retail banks to get better at utilising customer data.
The social network's vast wealth of information about you, your job, your friends and your lifestyle means it could introduce a personalised banking service that could blow Lloyds, Barclays and others out of the water, CBR heard at a financial payments roundtable this morning.
Nanda Kumar, CEO of SunTec, a firm whose products act as middleware between banks' apps and 1980s mainframes, told CBR that traditional high street names face competition from the likes of Facebook and Google.
"Facebook, it could become your bank," he said at the event held at the Capital Club, London. "It's kind of an unfair competition because they have complete insight of the customer, the customer's complete ecosystem and network.
"They know all their relationships. That's of phenomenal value to them."
While 90.5% of the social network giant's revenue was recently revealed to be advertising, rumours abound that CEO Mark Zuckerberg is planning to start an international money transfer business.
Kumar believes this will put it in direct competition with banks, and its advantage will be its greater knowledge of its users.
For instance, they could offer international students cheap money transfers, or provide better mortgage deals for those planning to buy a new home.
"You're talking about them becoming in direct competition with the banks," he said. "The customer has a choice of do they trust Facebook to keep their money or do they trust a large bank?"
Both banks and tech giants have experienced trust issues over the last few years, but banks face the unique problem that much of their customer data is locked up in decades-old mainframes.
They, along with money transfer firms, must also learn the lessons that social media has to give, according to ex-Deloitte consulting partner Faizul Ali.
He told an audience at the roundtable: "Soon Facebook will let you share data between apps. Can you imagine Visa and Mastercard letting us swap information? No, but we might want to."
SunTec's Kumar said he did not advocate a rip and replace method to updating banking technology, but rather companies should focus on "gradually commissioning things" and putting customer data into a single framework.
He cited Google as an example: "Google has given you one single wrapper to search anything in the world, but that data isn't put in one single server."
He added: "Banks could put an overlaying wrapper of understanding customer insight. It's possible. It's the kind of technology we enable."
The priority for banks must be producing real-time advice based on customer data, he said, leading to them being able to personalise advice and offers to their users.
"Going from a historic to a real-time nature is what is appealing to the new generation. As long as someone can bring in that they will give good competition even to Facebook."
JP Morgan told Bloomberg Businesweek on Tuesday that Facebook and Google were serious rivals.
Established in 1957, BCS, The Chartered Institute for IT, promotes wider social and economic progress through the advancement of information...