Many commentators have suggested that one of the biggest trends in the banking sector in 2018 will be new competition from established technology firms such as Facebook and Google. And now it seems Amazon is among those looking to increase its presence in financial services.
The company, which has transformed itself from a retailer to a fully-fledged tech provider offering everything from cloud computing services to AI voice assistants, is said to be in talks with several banks in the US about the possibility of developing an Amazon-branded checking account-type offering.
While discussions are said to be at at early stage, the Wall Street Journal reported sources close to the company suggest such an account would be aimed at younger consumers and those who currently do not have bank accounts. Financial institutions said to be involved in discussions include Capital One and JP Morgan Chase.
Amazon already has a working relationship with Chase, including a co-branded credit card, which offers benefits for Amazon Prime members such as up to five percent cashback on purchases made at the retailer. The two companies are also collaborating on initiatives to help lower the cost of healthcare for their employees. Meanwhile, Capital One is one of the many firms that rely on Amazon Web Services for its cloud computing solutions.
The fact Amazon is seeking to partner with banks rather than go into direct competition with them highlights that there are still many practical and regulatory hurdles to be overcome if technology companies wish to enter this market, many of which can be avoided by taking advantage of an existing bank’s systems.
Ali Raza, managing principal at the payments consultancy Blue Leviathan, told Bloomberg: “Why put up all the capital that’s required to run a bank and why pick up all the extra expense and headache of running a bank when you can go to a Chase and any number of smaller banks and have them license their bank?”