While social media companies are often dragged over the coals as a result of how they handle their platform content, their responsibility to protect vulnerable individuals or how they contribute to the countries they operate in through taxes, there doesn’t seem to be much commentary yet on their suitability as competitors to traditional banking, despite recent developments.
Regulatory changes, coming into effect soon, could change all of that as tech giants will be able to access customers’ bank account data on top of existing consumer data.
The combination of the European Commission’s Second Payment Services Directive (PSD2), the Competition and Market Authority’s open banking changes and the Treasury’s Open Data initiative have meant that APIs for third party access to the UK’s nine biggest banks will allow (with your consent) for a number of organisations to initiate payment on your behalf.
This may initially seem scary but this is normal practice in China where banks have conceded payment revenue to the likes of Tencent’s WeChat and Alibaba’s Alipay. Rather than going through your bank’s app to transfer money to friends or family, these transactions instead go through the same app that you’re using to have the conversation where you plan which restaurant to eat at.
Being able to instantly transfer money to people will become more convenient, but first, social media platforms will need to assure their users that not just their data, but also their money will be kept safe.