For years the quality of Facebook financial applications has left a lot to be desired. With a few notable exceptions - Fantasy Stock Exchange, for example, which went on to become KaChing and now Wealthfront - finance
apps have been largely entertainment-oriented, unstable, and unsupported.
The tide seems to be changing with the introduction of two applications in recent weeks. Loyal3, a social media-based transfer agent, offers customers the ability to buy shares in companies for as little as $10 through a "Customer
Stock Ownership Plan" or CSOP. Unlike an ESOP, which is designed to incentivize employees, the CSOP is essentially a stock-based customer loyalty program, the idea being that customers will be that much more loyal
if they own a piece of the company. There are no fees for the customer, as Loyal3 charges listing fees to interested companies. The Loyal3 Facebook app enables customers to buy and sell fractional
or full shares directly from their Facebook account.
Social discount broker Zecco recently launched Wall Street, an app which provides real-time stock quotes, charts, and trading via Facebook. Users
can "like" stocks, share comments and feedback via their wall, and place trades in their Zecco account. The interface is clean, the functionality is smooth and robust, and the content relevant.
We wonder if these moves signal a new interest in Facebook as a distribution channel as opposed to simply a marketing medium. We have maintained for some time that the sheer scale of Facebook can hardly be ignored in terms of its potential for financial services.
And with the SEC potentially allowing small companies to
raise capital via social networks, we believe Facebook is a ready-made platform for disruption in corporate finance.
© Finextra Research 2014