Amazon Bank?

Last week it was announced that Amazon are in discussions with JPMorgan Chase about the opportunity to offer bank accounts. Across LinkedIn there has been a good amount of discussion about whether the purpose of this is to (a) bolster Amazon retail activities; (b) apply the Amazon Web Services (AWS) technology portfolio; or (c) the beginning of a journey to create a new generation Amazon bank. I’m not convinced that (a) is worth the effort, I know (b) is already happening with many big banks using AWS in some capacity – therefore I believe that in all likelihood the answer is (c). 

While it may be hard to believe given the 10B$ revenue of AWS, Amazon’s core focus is not B2B technology provision. Amazon innovates technology to facilitate their consumer needs and then provision these to other companies through AWS as a secondary step. The catalogue of AWS capabilities have all been fuelled by an internal need first and foremost (Amazon retail, Fire, Alexa ..). This approach is great for AWS consumers because the capabilities have been hardened on a global scale by Amazon retail, but it also means that AWS is unlikely to build out a core banking technology, for example, without having an internal consumer need for banking.

Amazon core focus is disrupting traditional consumer markets and using innovation to reinvent their business model. With banking and finance generally there is huge scope for doing this as banks struggle to adjust to the digital age against their organisational and technology monolith. Despite this consumers remain because of a strong bond of trust, however for individuals that are twenty or younger the chances are they have never known a world without Amazon and their bond of trust is perhaps higher than other generations. Banking is ripe for disruption fuelled by an increasing affluent generation that have an expectation for digital, instantaneous and integrated banking. Amazon know how to deliver on this appetite. 

My expectation is that Amazon will enter the banking market, will innovate new technologies to facilitate their need in this domain, and make those capabilities available to other banks through AWS. It is a path they can tread with confidence.