Thu. Mar 28th, 2024

It wouldn’t be surprising if Amazon bank one day materialized into a robust conventional banking alternative. Though, Amazon is not a bank but the prospects of it becoming one aren’t too bleak. Why we think so? It is due to one of ecommerce giant’s trait to boast about its banking attributes and services that it would like to offer its customers that make us wonder if Amazon really thinking of its own bank.

It is to be noted that amazon has announced for multiple credit cards such as the Amazon.com Business Credit Card and Amazon Rewards Visa Signature Card. Secondly, based on its lucrative partnership with Synchrony Bank, Amazon plans for a secured credit card for consumers with bad credits. Sounds much like a bank? Yes, it sure does.

If you think Amazon has just ventured into the vertical of producing multiple cards or releasing new credit cards, you are up for a surprise. Amazon, has also launched itself in lending business by launching small business loans, through invitation only,  through its ambitious Amazon Lending business.  Additionally, Amazon Pay, has come up with its digital wallet for customers and a payments network for retailers and shoppers. This emphatically shows that Amazon is venturing out in the retail sector.

The origin of the rhetoric

The topic of Amazon in banking isn’t without credit or just mere speculation. Aforementioned reasons lead to the formulation of strong case in favor of Amazon bank. In addition to all the banking attributes that Amazon is now inculcating in itself, the claim was backed at Fortune magazine’s recent industry conference.

Many are also of the view that Amazon wouldn’t have much difficulty in venturing out in the domain of car loans. This is more prominent due to the fact that consumers can already purchase automobiles through Amazon. The cherry on the cake is that in addition to automobiles, auto parts like tires, mufflers, mats and garage door openers are also available.

Talking about Amazon’s consumer base, it would be an understatement to state that Amazon is just a lucrative business. Its colossal 102 million subscribers on Amazon Prime can offer huge potential customers base for Amazon. Thus, it can be rightfully anticipated that Amazon can provide an opportunity of financing and offering deals to customers with weak credit history in a few simple clicks. A single destination for shopping and finance, who wouldn’t want that?

Thus, if traditional banks can offer similar customer experience to its users and enhance their ability to connect with them through effective communication relationship with managers via secure video or live chat for smaller requests or questions, where customers can obtain personalized service, banks may to get a chance to court more customers.

Again, it is very likely that Amazon Bank will never materialize. This is due to an unadorned fact that Amazon will want to avoid all of the banking industry’s red tape at any cost. As it is widely known that entering into the banking services would effectively mean heavy scrutinization and having to meet national and state banking regulations. This would mean curtailment of Amazon’s freedom of action and this might not be Amazon’s long-term priority.

But even if Amazon may not be wanting to venture into the banking sector itself doesn’t mean it cannot serve as an ancillary corporation in the sector . As a matter of fact, banks can effectively end up partnering with Amazon. But why would they do so?

Partnering with Amazon would mean that banks will be able to track what customers spend on mortgages, rent or healthcare. Given such useful insights, the more it can serve as a clearing house for financial products. Thus it would be interesting to see that in what direction the scale will tip, will it be in favor of a robust, lucrative Amazon Bank or will Amazon priorities its freedom of action and operational, subsidiary revenues over others.

By Shivani Khanna

A woman who believes in equal rights and aspires to inspire people through her writings. I aspire to contribute to the economic world and society with diligence and thus being an economic advisor tops my career ambitions . I currently am pursuing Economic honours ( at undergrad level) from delhi university.

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