Don’t have a bank account? Amazon might have a solution for you soon
Online giant wants to develop product that would appeal to younger customers and those without bank accounts
Amazon.com Inc. is in talks with big banks including JPMorgan Chase & Co. about building a checking-account-like product the online retailer could offer its customers, according to people familiar with the matter.
The effort is still in its early stages and may not come to fruition, the people said. The talks with financial firms are focused on creating a product that would appeal to younger customers and those without bank accounts. Whatever its final form, the initiative wouldn’t involve Amazon becoming a bank, the people said.
If the product emerges, it would further inject Amazon into the lives of those who shop on its website and at its Whole Foods grocery stores, read on its Kindles, watch its streaming video and chat with Alexa, its digital assistant. Offering a product that is similar to an own-branded bank account could help reduce fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits.
The company’s latest push also answers a question that bank executives have been asking with increasing worry: When will Amazon show up on their turf?
With millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor. Its more-than $700 billion market value eclipses the combined value of JPMorgan and Bank of America Corp , the two biggest U. S. Banks.
Already, Amazon is building a delivery service that one day could compete with United Parcel Service Inc. and FedEx Corp. , targeting the hospital-supplies market and considering a push into prescription drugs. Shares of companies in those industries have fallen sharply on news of Amazon’s entry.
In banking, however, Amazon appears to be arriving more as a partner than a disrupter.
Last fall, it put out a request for proposals from several banks for a hybrid-type checking account and is weighing pitches from firms including JPMorgan and Capital One Financial Corp., some of the people said. It is too early to say exactly what the product will look like, including whether it would give customers the ability to write checks, directly pay bills, or access to a nationwide ATM network.
Amazon’s collaborative approach supports what bank executives have long said: that new regulations put in place after the financial crisis, while bad for profitability, are a protective moat against challengers.
Any move by Amazon to start its own banking arm would subject it to capital rules and other regulations that likely would limit its aggressive expansion. And there would likely be stiff opposition. An effort by Walmart Inc. more than a decade ago to obtain a type of banking license withered after intense criticism from a range of companies and lawmakers.
For JPMorgan or Capital One, winning the assignment would be a chance to keep a potential competitor close and strengthen ties to a company that is popular among millennials, whose financial habits are changing quickly.
In a recent poll of 1,000 Amazon customers conducted by LendEDU, an online student-loan marketplace, 38% said they would trust Amazon to handle their finances equally as they would a traditional bank…….read more