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How an Amazon bank could change the face of financial services

 

by Ashlee Wagner and Joe Metts
Executive search consultants at Charles Aris Inc.

If e-commerce, cloud computing, hardware development, music and video streaming, and brick-and-mortar retail weren’t enough, talk of Amazon entering the banking space has caused lots of chatter in the marketplace. The Seattle-based conglomerate is reportedly vetting big players such as JPMorgan Chase and Capital One for a potential partnership that might include checking accounts and other financial products targeting online shoppers – with millennials most in mind.

With Amazon’s seemingly full plate following its purchase of Whole Foods in 2017, why now for a pivot into banking?

Bain & Company envisions “Amazon’s banking services growing to more than 70 million U.S. consumer relationships over the next five years or so – the same as Wells Fargo, the third-largest bank in the U.S.” A partnership model with one of the country’s big banks could offer benefits to each party, particularly on Amazon’s side in avoiding regulatory compliance while simultaneously gaining direct access to customers’ checking accounts … all of which could save the company an estimated $250 million per year in fees.

But really, how surprised are we?

Amazon is already touching almost every aspect of consumers’ lives. Given talk of other tech giants such as Apple and Facebook entering financial services, we all knew it was only a matter of time before Amazon attempted a grand entry into the space. A major bonus in Amazon’s favor, in contrast to other tech firms, is the company’s high level of trust across its various market segments. Among all tech-based organizations, consumers are more likely to trust PayPal and Amazon over the likes of Apple, Google and Microsoft with their finances.

Source: Bain & Company

Consumer trends and expectations are in constant flux, and it’s no different in financial services. However, the entry of Amazon and other tech companies is already sending shockwaves across the space – and is keeping financial services clients on their toes. With the storm clearly brewing, “Amazon Bank” is sure to keep strategy and corporate development teams at the big banks (as well as consulting firms such as Bain) quite busy as they consider where to play and how to win in financial services.

To learn more, call Ashlee Wagner at (336) 378-1818, extension 9142, or email her at ashlee.wagner@charlesaris.com.

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