Future Branches 2020

December 01 - 03, 2020

Hilton Austin, Austin, TX

Amazon Could be the Future of Banking

Brought to you by WBR Insights



It's hard to find a single industry which hasn't been disrupted by ecommerce giant Amazon. The online behemoth has made an indelible mark on retail and will soon be making its way into the healthcare arena as well.

However, an industry one may not expect to see Amazon venture into would be that of personal finance, but that seems to be exactly what's getting ready to occur. Many industry analysts are now moving to a position of when rather than if companies such as Amazon, Google, Facebook, and Apple will launch their own financial brands. 83% of senior bankers expect Amazon to enter mainstream banking within the next decade, with 66% believing it will happen within just five years.

What then will the industry look like when these companies get into banking, and what will it mean for traditional brands in the space?

Amazon Finance

Existing banking institutions should not be complacent about the demand for these companies to enter the industry either.

65% of Amazon Prime members say they would sign up for a free bank account with Amazon, along with 43% of non-Prime customers, plus 37% of those who don't even shop on Amazon. 54% of people across the globe would trust a tech firm with their money more than they do banks. Adding to this problem is the fact that customers aged 18-34 are more willing to try banking with a tech giant than those from previous generations. This means, as time goes on, more and more people will be willing to bank with one of these companies.

Of course, many of these tech giants already offer some level of financial service. Google and Apple both have their respective payment platforms, and Facebook has recently partnered with UK-based TransferWise to help facilitate international money transfers.

Of all these tech brands though, Amazon already behaves the most like a bank. The Amazon wallet is for all intents and purposes a cash account, allowing customers to store money and use it to pay for goods both on- and offline. Amazon also offers short term loans in the form of hire purchase for its products and has recently launched an Amazon Rewards Signature Visa Card in partnership with JP Morgan Chase.

"The bad news for banks is that Amazon, Facebook, Google and Apple are not going anywhere," reports Marketforce. "They all have legions of users, ginormous databases, a strong brand and technology know-how to leverage all of this into the kind of innovative propositions of which customers just can't get enough. Quite simply, a bank that isn't worried is one that hasn't fully understood the threat."

A New Generation of Banking

It may not all be cause for concern, however. While Amazon's encroachment into banking is worrying, it could also provide opportunity.

Amazon regularly supplies merchants on its marketplace platform with cash advances. However, while the demand for cash advances through Amazon is reported to be around $5 billion, the company only handed out 1$ billion in 2017. This leaves $4 billion that Amazon either wasn't willing to lend or was unable to lend.

This opens an opportunity for Amazon to act as a kind of price comparison site which can link merchants using its platform to banks which are able to offer the cash advances they need - and take a piece of the action for itself of course. Amazon's powerful software and data capabilities could also handle the heavy lifting of processing and underwriting these loans - as a way of justifying their cut - and reduce the amount of work banks need to do.

Amazon can also use its platform to connect customers who are looking to open checking accounts to those same banks and provide the technology and marketing services required to both open and manage them.

This position shifts Amazon from being a threat to traditional banks to one of being a potential distribution and marketing channel, as well as a technology platform provider. However, not all will be safe. Amazon's entrance into checking accounts and lending will likely prove a direct challenge to legacy fintech providers such as Fiserv, FIS, and Jack Henry. Once Amazon sets itself up in this field, it's powerful technology and significant influence will make the future of these providers very unsure indeed.

Final Thoughts

Amazon is coming for banking, of that there is little doubt. However, the onus is on traditional banks to meet the challenge and try to work with the ecommerce giant rather than against it. While some sectors of the industry will undoubtedly suffer, there remains an opportunity for others to thrive by leveraging the advantages of Amazon's capabilities.


Amazon's inevitable encroachment into banking is set to be a hot topic at Future Branches 2019, being held in November, at the Hilton Austin, Austin, TX.

Please download the agenda for more information and insights.