A NEW wave of digital banks could face a consumer backlash over their links with Facebook following its recent data breach, with users questioning whether their financial details will end up being exploited.

At the start of this year financial regulator the Financial Conduct Authority (FCA) smoothed the path for new banks to provide more competition to high street names with the introduction of open banking, a system designed to allow consumers to share their data with third parties.

Since then, a host of brands like Monzo and Starling have gained cult status among millennials by developing apps that connect to pre-paid cards, providing real-time updates on spending and budgeting tools.

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These apps were previously limited by rules that stopped banks sharing details about customers’ current account and spending habits. However, open banking allows digital banks to position themselves as financial hubs by connecting customers to a range of services, from investing spare change to cancelling unused subscriptions.

The financial chatbot Plum, which operates through the Facebook messenger service, has become the subject of mounting privacy concerns after reports that Facebook messenger keeps records of users’ entire call and text histories if granted access to their contacts.

Another app, Emma, came under fire once it was launched through popular digital bank Monzo because it requires people to sign in using Facebook.

However, after the social media giant recently admitted to letting political consultancy Cambridge Analytica use the data it collected from users for campaigning purposes in the 2016 US presidential election, consumers are questioning how their data will be handled by financial apps.

Read more: Facebook to probe ‘tens of thousands’ of apps, says Mark Zuckerberg

One person on Monzo’s feedback forum wrote: “I don’t want Facebook anywhere near my transactions…I’m out.”

Another said: “Seeing this on a financial app which doesn’t even profit off ads (in the traditional sense) is a bit concerning and disappointing.”

Emma, which calls itself “the banking app for millennials”, defended its decision, saying the Facebook sign-up service is used by thousands of companies and that no financial data would be shared.

Co-founder Eduordo Moreni wrote on Monzo’s forum that it was easier for companies to gather personal data from “what you type on Google or the like buttons spread across two thirds of the internet”.

Monzo’s privacy policy states: “We won’t share identifiable personal data with third parties for their direct marketing unless you give us permission.”

Plum, meanwhile, said that it cannot access users’ Facebook profiles, nor can Facebook see users’ Plum messages.

These reassurances do not allay the fears of some experts, with financial commentator Merryn Somerset Webb saying the Facebook scandal has reminded the public that companies that do not charge money “are charging you in data”.

Read more: Facebook to alert users affected by Cambridge Analytica data breach

She said: “Maybe you think that’s okay when it’s just the odd birthday, some disconnected likes and a bit of browsing history. But what about a full record of everything you buy and sell, every debt you have?

“The likes of Facebook and Google make educated guesses about what you want and what you like but a good “free” financial app doesn’t have to guess - it knows. If you don’t find that uncomfortable, you should.”

Open banking means all banks can now pass your financial information onto other financial firms – but only with your consent. The data will be used to offer you new financial products, such as credit cards and energy deals.

Digital banks promise they will remain free but are aiming to take commission from the sale of these products.

A recent influential report said this financial revolution will not be risk-free. The Joint Committee of the European Supervisory Authorities (ESA) said that financial firms could misread so-called big data, make it harder for certain customers to access their products or bombard customers with excessive marketing.

But the committee concluded that the benefits currently outweigh the risks, and that new laws to protect consumers would be “premature”.

Meanwhile, you can get to know your dig data rights and companies must provide a copy of your data if you request it. The ESA said that data can only be used with “clear, specific and freely given consent” from users. Companies must act “honestly and fairly” when creating and selling you new products, and they must have strict security measures to prevent your data being hacked.