Facebook Patent Hints at Future PFM Service

Facebook’s interest in advancing its payments and e-commerce is a poorly kept secret. Between hiring ex-PayPal president David Marcus to run Messaging to CEO Mark Zuckerberg’s recent comments regarding payments, the company appears to be hellbent on growing payments business.

Perhaps even more so than was previously thought.

Bank Innovation has discovered a new Facebook patent filing for a personal financial management (PFM) tool that could allow the social media giant to better leverage transaction and social media data for users and advertisers alike.

The US Patent and Trademark Office application from Facebook outlines a rudimentary PFM tool and was filed on February 6, 2013 and published on August 7, 2014. The application discusses a service that uses “information describing financial transactions of its users … [to] provide its users with information about their financial habits.” Sounds like a PFM app to us.

The patent has not yet been granted. Facebook has not responded to our request for comment.

Facebook’s PFM service may be vastly different from existing services like Mint, mainly because it will presumably use transaction data from financial services and combine it with social media data to help users compare their spending habits to other Facebook users within their demographic.

After a user’s transaction data is imported into Facebook from the user’s “financial account provider” (read: bank or financial institution), Facebook will sort the transactions into different categories curated based on the user’s interests and the types of purchases — like “clothing, dining, and gas.” Then, Facebook will identify a group of people with “one or more characteristics and connections” with the user. This will include “demographic information (e.g., age, gender, ethnicity, race, etc.), location (e.g., birthplace, current city or state of residence, etc.), education level, occupation, or any other suitable characteristic” — and then allow the user to compare themselves to the group in different charts and graphs. Another feature will also help users develop budgets for their categories based on what users in similar groups spend.

Edward Zagat and Loren Cheng, two high-profile Facebook employees, were credited in the application as inventors of the patent. Zagat is the son of Tim Zagat, founder of the popular restaurant guide company that was sold to Facebook. Zagat arrived at Facebook in 2011, joining the then-unknown Facebook Payments team. His LinkedIn profile now says that he works in “Ads” at Facebook. Cheng is a well-known product manager with extensive experience at PayPal before coming to Facebook in July 2010.

Facebook’s PFM patent shows the untapped value of financial data and, perhaps, the shortsightedness of financial institutions. The information used by most PFM apps (and, presumably, by Facebook if this feature ever comes to light) is the same transaction information provided by banks in monthly statements. The fact that financial institutions have not been able to develop a similar service that incorporates your social media data — something companies like Facebook are more than happy to share — is hard to explain. Meanwhile, it seems neither Facebook nor banks know how much information is available in transaction data — the patent doesn’t address how Facebook will access SKU-level transaction data (an itemized list of what was purchased).

A PFM app is an easy way for Facebook to further develop its payments-related products, but the true value of Facebook’s PFM lies in the affiliate services it could offer users. One potential use described in the patent is to offer even better targeted products to users by analyzing their transactions, figuring out what they bought, and offering products in categories on which users did not spend money. So, for example, if Facebook notices that I haven’t spent that much on clothing this month, Facebook will start pushing advertisements from J Crew and Brooks Brothers, two brands I “Liked” on Facebook. It seems like the whole point of the PFM feature from Facebook is not to get you to spend more money, but spend your money better — developing services with such a direct utility to the end user is one way to create a surefire hit.

Correction: This post has been updated to clearly reflect the date the patent application was filed.