Australian financial institution, Commonwealth Bank (CBA)is to offer banking via Facebook by the end of this year, and has further announced that its Kaching mobile payment application is now available for Android-based mobile devices.
Speaking in Sydney, David Lindberg, executive general manager of card payments and retail strategy, said the bank had taken into consideration the lack of privacy and security of Facebook in its design of its Facebook banking application, which is currently in beta testing, as it was further developed.
“We know that there are customers who just do not want their financial information sitting on Facebook,” he said. “For those customers, of course, there is no reason to use [the application].
“At the same time, we know that there is a segment of customers who are very comfortable with using Facebook for a number of private things, one of which is for financial services. So, in terms of the privacy, our view of privacy is that it is something which is completely up to the consumer.
Separate to privacy were concerns around fraud and security risks, something which the bank was taking ownership of and was attempting to “set the highest possible bar” for, Lindberg said.
Lindberg cited the bank’s NetCode SMS two-factor authentication system as a means by which it would help secure Facebook payments and would be used by the party making the payment on Facebook in much the same was a customer of the bank’s Netbank online banking portal would when making a third-party payment.
"We will simply not roll [the] Facebook [application] out until we have a 100 per cent Facebook security guarantee which is as ironclad as what we have today [for Netbank]."
Lindberg acknowledged that a potential security risk existed on the receiving side of the Facebook payment application, such as scams which request money from friends and family to help someone traveling overseas.
“Those scams are real and we take them seriously, but they occur on just about every platform,” he said.
The bank’s chief marketing officer, Andy Lark, claimed the bank was already well aware of social engineering-based scams, which it dealt with “every day.”
“For us that is not an uncommon event. We have built systems, processes [and] monitoring which enables us to track all that. The other thing we have, which most banks don’t have … is a realtime banking core so we know everything in realtime. We have a precise fingerprint of all your activity in realtime so that gives us a unique capability to mitigate risk and build a more secure platform," Lark said.
“We don’t underestimate the challenges of banking on Facebook, but it is about us building products which are more relevant to different sectors of the market."
In addition to its planned Facebook banking and Android-based kaching app, the bank also announced the launch of its Bump mobile payment service for iOS-based devices. Using Bump, iPhone users can transfer payments to each other by physically bumping two devices together while pressing an on-screen payment key.
According to Lindberg, payments using the service are secured via looking at GPS data — GPS is required to be active on both devices for the service to work — the use of the accelerometer function in both devices — hence the act of physically bumping phones — and two factor authentication — the simultaneous pressing of the payment key.
According to Lark, the Bump software is licensed from a third party provider in the US which does not currently offer an Android-compatible version of the software to the market. However, the bank had been testing a beta version of the Android compatible software. Lark said the bank was keen to release an Android version of the service once the third-party software had “gone gold”.
The announcements by the bank can be viewed as responses to the profound effects both mobility and social media are having on the banking sector. In June, attendees at the June Asia-Pacific Banking + Finance conference were told that the financial sector needed to change its business practices to embrace mobility and social media or face dying out.
Speaking at the event, CommBank’s own general manager of channel marketing, Andrew Murrell, argued that the bank had been forced to “reposition” itself in light of consumers’ accelerating uptake of technology.
“We’re now living in a mobile and social world,” Murrell said. The mobile phone “is the device which people will interact with us the most on over the next six to 18 months” and payments are a “battlefield”, he said at the time.
“We certainly agree that if we do nothing we are at risk from being interrupted by other players in the field.”