The continued push by Amazon into financial services could have a bigger effect on startups over banks; Nicolas Parmaksizian, global head of Capco digital, tells TearSheet, “If you combine an Amazon with a Capital One, you’re combining the amazing power of Amazon and Capital One’s data analytics, and that’s a challenging thing to compete with as a startup banking brand.”; digital only banks look to offer a better experience at a lower cost than the traditional banks, adding Amazon into the mix could drown out those startups before they ever get going. Source.
According to sources Amazon is talking with banks such as JPMorgan Chase to build a checking-account-like product; while it is still early and the product may not see the light of day it shows Amazon’s interest in working with banks to expand into financial services. Source
The company shared information about their loan business in a broader update about the company; total lending was $3 billion since Amazon Lending started in 2011; an article by PYMNTS.com in June 2017 reported that the company had surpassed $1 billion in loans; in 2017 over 300,000 small and medium sized businesses joined Amazon Marketplace. Source
There has been talk about one the big tech firms becoming a bank and potentially forever changing financial services; event without a banking license big tech firms are making noise in the finance market; Amazon and PayPal have been extending billions in loans and banks have started testing technologies like Alexa; the tech firms have also amassed a trove of data that could end up being as important as banking data; as banks become more digitized we will begin seeing a further mixing of interests to help offer the best experience as possible to the customer. Source.
Amazon is speaking with the Bengaluru-based company; the company is focused on small businesses but is also looking to lend to consumers on Amazon’s platform; According to sources Amazon may invest $5-10 million; Capital Float recently raised $45 million in a Series C; Amazon has recently done other deals with fintech companies in India. Source
News of Amazon in talks with JPMorgan Chase and Capital One to offer a checking account product has brought up a number of regulatory questions; key questions include who owns the customer, what is Amazon’s role in the accounts, who regulates Amazon in this instance and will Amazon need to become a bank; while details of the deal are not fully known regulators will be keeping a close eye on the partnership. Source.
Nomura analyst Dan Dolev says that Square resembles Amazon and Google in the early days of those tech giants; "In 10 years, Square is likely to be a very different company helped by accelerating share gains from payment peers and relentless disruption of services like payroll and HR," Dolev said in a note to clients that was reported by Business Insider; the combination of new business ventures and increasing the number of ways they process payments are twos of true main reasons for the optimism; shares were trading almost 5 percent higher on Friday after the note. Source.
Since the financial crises banks, for the most part, have focused their time and effort on complying with new regulations and building up capital ratios in case another crisis hits; while they were doing this another industry, fintech, emerged and has eaten into some of the core profit making businesses of the banks; banks have started to catch up with technology and as countries like the US look to pare back some crisis era rules the banks see the next few years as the perfect opportunity to invest wisely in technology; the one thing the banks might not be able to handle is if Amazon, Facebook or Google begin to encroach further into fintech, potentially bring in competition who can immediately match up in size and strength. Source.
While Amazon is unlikely to buy a bank in 2018, they are still a threat to banks and other fintech companies; the company is already involved in payments, cash, debit cards, small business lending and consumer credit; Tearsheet shares how retail and financial services companies are becoming more intertwined and how this is a trend that will continue into 2018; the way consumers interact across various apps and accounts is also having a significant effect on banks. Source
Google, Apple, Facebook, Amazon, and Microsoft, or GAFAM as they are beginning to be know are continuing their move towards financial services; payments have become one area in particular where they have seen the tech giants making inroads; mobile wallets for in-store payments, money transfers between friends and even loans to small businesses; tech giants have only started to disrupt fintech as they look to become bigger players in consumers financial lives. Source.
