The competitive pressure for card issuers to reach consumers 'where they live' has become so great that banks may no longer be able to avoid integrating with social networking sites like Facebook.
To give banks another way to interact with customers online, Cardlytics' Facebook rewards app takes the same technology it offers through online banking sites and makes it accessible through Facebook.
"This gives consumers a chance to engage with banks via Facebook, and for banks it gives them a positive relationship on the social network," says Rod Witmond, senior vice president of talent acquisition and international expansion for Cardlytics.
Cardlytics is expanding its analytics and marketing platform—currently available via online, mobile and email—to allow consumers to op-in to receive offers and rewards via Facebook. It's hardly alone in moving payments capabilities to social networks. American Express recently began supporting payments made through Twitter —one of several payment companies to tap the network for payments, including Dwolla, Chirpily and Vantage Credit Union. American Express has also used the popular Facebook game Farmville to promote the Amex Serve digital wallet.
Cardlytics will allow issuers to deploy a Facebook app that integrates with the Cardlytics rewards platform. The app enables consumers to privately see offers and rewards while using Facebook. The consumer does not enter personal banking information, nor is this information shared—Cardlytics is using the Facebook application programming interface (API) to create a link from a token ID at the issuing bank to the consumer's individual Facebook ID.
Cardlytics says it's in talks with issuers to use the Facebook app, but it has not announced any that have agreed to use it. Bank of America and Regions, two Cardlytics clients, say they are not currently using the new Facebook app, and did not comment further. Other clients such as PNC and Fiserv did not return requests for comment.
Cardlytics, which launched in 2008, has more than 300 clients and reaches about 70% of U.S. households. The Facebook rewards app is similar how Cardlytics works in other channels, adding features such as the ability to "like" rewards and experiences and discuss their use of the app online.
Cardlytics' app is targeting issuers pressured to keep pace with the moves into social commerce by American Express and other companies.
"Facebook makes a lot of sense because a lot of customers are there," says Stessa Cohen, a research director at Gartner. "One of the things that's becoming clear is that if you put something on a bank's website, the customer may not see it."
There are some challenges, however. The FFIEC, for example, just proposed guidance (PDF) on the use of social media by banks. The possible trap for card issuers is risk — the FFIEC says the use of social media can affect compliance, legal, privacy reputational and operational risk by using social networks to deliver financial services or marketing.
"There are issues around customer privacy…banks have to be careful about payment offers that may use personal information," Cohen says.
However, consumers simply visit social networks more often than banking sites, making Facebook a potentially better venue to deliver offers, analysts say.
"The Cardlytics model has always been: people have to go the bank site to see the offers, and I think most people don't do that very often. So [they] need to get the offers out without cluttering people's email inboxes," says Aaron McPherson, a practice director for IDC Financial Insights.
There is a lot of untapped potential in Facebook, but also a few pitfalls banks are wary of, he says.
"Banks haven't really done much on Facebook beyond 'brochureware' and press releases. And that's one of the tricks here. If you are on Facebook people can post whatever they want on your wall, and that's the sort of things that banks don't handle very well," McPherson says.