Social networks such as Facebook have proven a useful venue for customer service and marketing. After a tepid initial response, banks are starting to nudge toward providing actual financial services through social media sites — with South Africa's FNB Bank (FNB), New Zealand's ASB Bank(ASX) and Australia's Commonwealth Bank (CBA) all embracing Facebook as a major delivery method.

"We have realized that social medial is more than a marketing channel, but a business channel," says Ravesh Ramlakan, CEO of FNB Cellphone Banking, FNB's mobile banking unit, which recently began offering some banking services through Facebook.

The bank was responding to local adoption of Facebook. There are more than 4.7 million active Facebook users in South Africa (out of 50 million total population), and more than 150,000 FNB Facebook fans, giving the bank a readymade market for social media banking. "We have found that a large number of our customers are Facebook users," says Ramlakan.

FNB Bank, which is part of the $90 billion-asset Rand Group, had previously used Facebook as a marketing and customer service channel, and found an overlap between its mobile banking customers and Facebook users. "It only made good business sense for us to take banking to Facebook," Ramlakan says.

Consumers access banking on Facebook by linking their mobile phone banking profile to their Facebook profile. Once logged into the bank's mobile website, consumers select the banking option, which gives the option to link to a Facebook profile. An option to proceed to Facebook is also given. Once logged into Facebook, the consumer selects "allow FNB Cellphone Banking APP" to complete the linking process. Once that step has been completed, the services that can be accessed will appear on the consumer's Facebook profile.

Currently, the services are limited to purchasing prepaid products such as airtime, text messages, and smartphone data bundles, as well as viewing lottery results and balances. FNB customers can also buy FNB vouchers using mobile banking and can send those vouchers to friends on Facebook as gifts. The recipient of an FNB voucher can redeem it as prepaid airtime or convert it to cash by using the bank's eWallet service. The Facebook banking service will later be updated to allow payments, though the bank did not reveal a timetable.

To power the service, the bank has purchased a Facebook application that handles the integration into the bank's systems. Ramlakan says security and privacy are managed by only allowing registered FNB Cellphone Banking customers to access the Facebook Banking application after the customer has first logged into FNB Cellphone Banking. "This linking solution leverages off all the security mechanisms built for FNB Cellphone Banking. Finally, the products on offer on the Facebook Banking application are all low risk transactions."

Other banks are also dabbling in Facebook banking. Australia's Commonwealth Bank is reportedly developing an online banking offering in partnership with Facebook. The $780-billion asset bank did not return queries by Wednesday morning. And New Zealand's ASB Bank, which is owned by Commonwealth Bank, this week updated its mobile app to allow customers to make person to person payments directly to Facebook friends. While the sender is required to be an ASB online banking customer, the recipients do not.

Users download the ASB mobile banking app from the iTunes store. Once the app is running, the user selects the "pay/transfer" tab — a "Pay Facebook Friends" button appears on the bottom of the screen. First-time users are asked to log into Facebook and approve the app's privacy and access settings. Users select a friend, enter an amount and a description of the payment and click "confirm." The payee receives a notification. To accept a payment, users see a notification to visit an ASB collection application in Facebook. After approving privacy and access settings, users choose from a list of payments they have received. They can choose one of the payments and enter their bank account number. Clicking "payment" executes the transaction. ASB says it uses the "newest" encryption techniques to protect the transactions.

The $63 billion-asset ASB has deployed a social media team to spot opportunities to use social media for customer service, marketing and sponsorship campaigns, data accrual and to communicate new banking services or news. "Facebook and banking are both heavily integrated into customers' daily lives so it is a golden opportunity for brands to engage with this community. Banks and financial institutions can easily reach out to customers to provide updates on relevant and useful products and services, gather feedback as part of the customer journey for product development, provide social customer support, and deliver secure, frictionless banking services," says Simone McCallum, a corporate social and communications strategist for ASB.

Demand for Facebook banking is still relatively low, but is poised to increase rapidly given user preferences for social media and age demographics. Javelin Strategy & Research says a recent survey of 5,000 U.S. adults found 15 percent of consumers aged 18-24 are ready to adopt social media "right now" for financial services. "Certainly the potential market is there, it's a mistake to not think about Facebook and social media," says Mark Schwanhausser, a senior research analyst for Javelin.

Schwanhausser says people are starting to warm to using social media to engage banking services after a tepid start. An earlier survey asking consumers if they were willing to match personal financial with social media was bearish — "very loudly and clearly consumers said no," Schwanhausser says.

But over the past year, banks such as Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) have increased the use of sites such as Twitter and Facebook as customer service venues, and Schwanhausser says consumers are getting more comfortable with social media.

As consumer use of mobile devices for shopping and social media for comparisons or discussing purchases with friends increases — adding financial services such as payments would be the next logical step. "It's wise to be thinking about how to serve customers if they are already using that type of technology," Schwanhausser says.