Facebook: what role does the IT giant play in the finance sector?

For Neil Hiltz, technology is a core element of the banking system in a “mobile first society”. In an interview, the Head of Global Financial Strategy at Facebook explains how Facebook’s mission is to work together with financial service companies to increase efficiency, scalability and long-term profitability in a mobile world.

Neil Hiltz is the Head of Global Financial Strategy at Facebook. At the 23rd Handelsblatt Banking Summit in August 2018 in Frankfurt he will talk about the future role of technology companies in the finance sector and the importance of Open Banking.

Interview with Neil Hiltz

Let’s forget about traditional banks! In future, we will use only Facebook and other tech companies to process our payment transactions. Do you think that this assertion will come true?

That’s a fantastic question, because I do consider traditional banks to be technology companies. Banks have always adapted their capabilities to leverage new technologies. One example is call centers. When the telephone reached scale, and switching technology evolved, banks were able to shift their model from Retail only and bankers hours, to a hybrid model and 24×7 support. Now, the industry has adapted once again, taking advantage of the internet and smartphones, as we shift towards a mobile-first business model.

Technology is a core feature of the banking system, and it’s the same for payments networks as well. What we are seeing is adaption to new technologies and acceleration, but technology is at the center of payments and all Financial Services. Over the past few years, I’ve had the opportunity to meet many Financial Services leaders around the world. I’m very encouraged by the industry, as I see these industry leaders recognizing and stating that they are technology companies who provide Financial Services.

Our mission as we work with Financial Services companies is to increase efficiency, scalability, and long-term profitability in a mobile first world. We believe that the capability of mobile not yet fully leveraged, and our teams work with clients every day to realize the full potential of the shift to mobile.

What importance does the business sector of banking have for a tech company like Facebook?

Our mission at Facebook is to build community and bring the world closer together, and we can’t achieve our mission without a strong and positive relationship without banking. I used to think of community as a place with people – a neighborhood or city, for example. However, it’s much more powerful to consider community as a feeling of fellowship with others, to have shared interests, and goals.

From this perspective, banking is critical to build community. While every person has unique needs depending on their life stage and circumstance, the common goal is to continuously improve their financial lives. The banking sector has developed expertise and trust over decades and centuries, and are best positioned to support our community to achieve the goal of improving their financial life.

What could a collaboration between Facebook and financial services providers look like?

We have many collaborations today, and we hope to keep building our relationships on behalf of our global community. Our teams work with Marketing departments, as we take advantage of mobile and new capabilities to transform creative, get the right message to prospects and customers at the right time, and to measure results more accurately.

We also are working with Sales and Service Operations teams, as we begin to leverage the power of Messenger and WhatsApp to further improve capabilities for people. And, we also work with Payments in a variety of ways – from person-to-person payments in Messenger, to supporting payments for causes and commerce, and, critically, to allow our 6 million advertisers to buy ads to grow their businesses.

How will open banking change the banking landscape?

If we consider the opportunity that banking has through a shift to a mobile-first business model, the opportunities for open banking are substantial. As more people interact with their banks through their smartphones, there is now a real opportunity to build a much better experience for Personal Financial Management. Despite years of working on PFM, the adoption and usage by most people is not high. I’m hopeful that Open Banking will provide a foundation to build a new generation of PFM tools that help people better improve their financial lives.

Additionally, there’s an expectation that there will be increased competition, as switching costs are lowered for people. From this perspective, it’s even more critical for banks to accelerate their investments in becoming mobile-first – creating best in class customer experiences with more efficiency and scalability.

What could traditional banks learn from tech companies?

I think we can learn from each other. Banks have been evolved over centuries, and people have trust and high expectations for how banks support their efforts to improve their lives. This aligns well with our mission, and we are just at the beginning of our journey to build community.

From the bank’s perspective, there are opportunities to learn about our specific culture and how it supports our mission, keeps our teams motivated, and builds empathy for our community. From a technical perspective, banks can better understand people’s expectations for their experience on mobile, and how banks can improve how they communicate their value on this new medium.

How does the German financial market differ from the one in other countries, especially in the U.S.?

Rather than focusing on what’s different, we can look to what we have in common between the two countries. Both countries have smartphone penetration rates near 70%, which means there is a significant opportunity to improve people’s financial lives at the individual level, and to do this with a mobile-first mindset.
Consider that smartphones have only been in market for ten years. In that time, over 1 billion people have begun to use mobile banking, and the projections are that 2 billion people will be using mobile banking by 2020. We are still in the beginning of developing these capabilities, and we’re very excited about working with Financial Services companies to further leverage the power of mobile, and to improve efficiency, scalability, and long-term profitability while also significantly improving the banking experience for people.