Amazon exploring ways to offer branded bank accounts
Reports emerged Monday that Amazon.com was in conversations over offering Amazon-branded banking accounts. This should not come as a surprise, particularly given that other significant ecommerce players like Alibaba and Rakuten offer similar banking services. Amazon itself is already involved in a variety of financial products such as co-branded credit cards, store cards, and its Amazon Cash service. Amazon has built a tremendous amount of brand equity which could go a long way toward extending banking services to consumers, regardless of whether Amazon itself holds the accounts or whether they partner with an established bank. Consumers have already shown a strong level of trust towards Amazon through their willingness to exchange personal data and privacy in order to benefit from its many services. Offering banking services could offer another potential avenue for Amazon to both extend its influence and learn more from its consumers.
While there is little certainty in what a possible Amazon bank account would look like, it is worth noting that Amazon is unlikely to be the only non-bank looking to offer new banking services. The European Union in particular is in the middle of rolling out its new open banking transformation, “PSD2.” PSD2 specifically aims to help facilitate partnerships and competition in the banking industry, opening bank data to third parties and allowing third parties to step in and initiate payments on behalf of consumers. While indications so far are that Amazon is considering banking in the US, it certainly wouldn’t be too far of a jump to see Amazon and other companies exploring similar opportunities in Europe, where regulations could help bring traditional players like banks to the table to create mutually beneficial partnerships. Reaching out to younger customers, particularly those who might be unbanked or underserved, through a trusted channel such as Amazon could be a particularly compelling option for all parties.