Facebook added a feature to make its Instagram platform a more efficient place for social media users to shop and buy, which Deutsche Bank believes "can drive monetization" further for the app.

"We think a more streamlined E-Commerce experience on Instagram could add an incremental $10 [billion] of revenue in 2021, and we see 'Checkout with Instagram' as a key step towards unlocking this opportunity," Deutsche Bank analyst Lloyd Walmsley wrote in a note to investors on Monday.

Instagram rolled out the new e-commerce feature last week. The "Checkout feature" means Instagram users can browse and purchase offerings from 23 top brands in the U.S., all within Facebook's app. Walmsley said "Facebook is investing heavily behind this as a priority" and his firm expects many brands and retailers will seek to quickly add their products to the feature.

"We see potential for momentum to carry over to core Facebook and Marketplace and potentially even via a standalone shopping app," Walmsley said.

Deutsche Bank has a buy rating on Facebook with a $200 a share price target.