Amazon: Ecommerce Marketplace, Cloud Service Platform, and … FinTech Giant?

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Michigan FinTech

4 min readMar 6, 2018

It’s difficult to talk about tech without at least one of a few well-known firms coming up. Companies like Google, Amazon, Facebook, and Apple have integrated themselves into our daily lives. Having reached a combined valuation of $3 trillion this past summer, these firms have no plans of stopping their innovation, particularly in financial services. In fact, many of these firms have the potential to be more disruptive in financial services than many FinTech startups and even banks themselves.

A few weeks ago, I got the chance to attend a speaker event with Peter Faricy, the VP of Amazon Marketplace (and Michigan Alum, Go Blue!). He talked to us about his career path, daily life at Amazon, and how he loves Michigan. In this hour and a half session he covered a lot of information about Amazon, including their work to support entrepreneurs around the world through Amazon Lending and other initiatives.

Being the son of small business owners, I thought this was interesting. I dug a little more into it and discovered that Amazon has a lot of FinTech initiatives, including Amazon Lending. A couple hours and cups of coffee later, this article was written. Though it’s not comprehensive, I hope this article can introduce Amazon’s FinTech initiatives, explain how and why Amazon has these initiatives, and get people to realize that FinTech is more than cryptocurrencies.

Amazon

What started as a small company changing how we buy books has blossomed into a robust online marketplace, changing the way we shop forever. With more than 310 million active user accounts, Amazon has established itself as a dominant force e-commerce. Out of the tech giants, Amazon seems like the best fit in financial services, simply because their company is built off an online marketplace. With so many users and transactions taking place on their site, Amazon has been able to leverage their platform to become a major force in FinTech (#powermovesonly am I right?)

Amazon Lending: B2B Loans

Since 2011, Amazon has lent out $3 Billion to over 20,000 small businesses through its Amazon Lending platform. Amazon makes loans between $1,000 and $750,000 available for businesses who sell on its marketplace platform. The data on marketplace is key here, as it’s leveraged with machine learning algorithms to identify qualified businesses and helps choose interest rates.

Image taken from: http://startedindia.com/indian-startup-news/715/

Getting the right credit at the right time can significantly impact a businesses long term success. Through its platform, Amazon is helping entrepreneurs across the world. It also helps its own bottom line, as these businesses can sell more inventory on marketplace, have to pay Amazon interest, and are more likely to stay on its platform because of higher switching costs (50% of companies choose to take another loan from Amazon).

Amazon Payments

Amazon Pay is Amazon’s online payment processing service. Using this, Amazon account holders can pay on external websites using their Amazon accounts. The service is currently free, and available in the US, France, UK, Japan, Italy, India, Spain, and Germany.

With this service, Amazon expands its reach on online sales, even if the transactions don’t happen directly on their site. Customers benefit from having the ease of having all of their data stored in one place and being able to online shop on multiple websites. Businesses are able to offer a better experience for their customers, and can help secure confidential information.

Amazon Web Services Blockchain Partners Portal

Amazon Web Services Blockchain Partners Portal (a mouthful I know) is another technological initiative of Amazon. A few months ago, Amazon announced it would support users of AWS by offering blockchain solutions. The applications of blockchain span farther than financial services (such as healthcare, supply chain, and education). However, Amazon is supporting any blockchain solution on AWS. Companies like T-Mobile and PwC have already utilized AWS Blockchain.

Amazon Finance Tech Team

Amazon has an entire team dedicated to financial technology (creatively dubbed Amazon FinTech). According to their website, this team’s responsibilities is to “work with every part of Amazon to capture, compute, transact and report their financial events.”

… every part of Amazon to capture, compute, transact and report their financial events

This team seems to be more internally focused, helping other parts of Amazon understand their expenditures and meet all the relevant regulations, mostly by developing technologies and utilizing data in tandem with their financial knowledge. You can see a short video on what they do here.