How Amazon is Transforming Money

You may have heard that Amazon has been in talks with JPMorgan Chase about the possibility of an Amazon-branded checking account. No doubt, Amazon is looking to streamline their customer relationship with a built-in payment system, so customers won’t have to leave the site or slow down to enter payment details. And Amazon can add one more industry to its already massive reach.

Integrating payments like this is not new, “Banking as a service” (BaaS) has grown exponentially thanks to services like Venmo, Apple Pay and Google Wallet. What is interesting is how Amazon can add payments as a service, and simply funnel new customers from their other platforms.

The challenge? The Federal Reserve Survey of Consumer Finances states that 92% of Americans already have a checking account. And a Bankrate survey says that the average American has had the same checking account for 16 years.

The remaining eight percent of Americans without a checking account might provide a ready market, if Amazon can streamline payments and make opening new accounts simple.

Early Adopters

Millennials and Generation Z are driving the changes to payments. These rising generations are moving from traditional banks to digital payment services like Simple, Venmo and PayPal. These services offer the same function as a checking account, without a physical bank.

Amazon’s control of retail will offer disruption in the form of convenience with seamless payments for Amazon services like Prime Video, Music and Audible. These services are attractive to young consumers—and remember people under age 18 are often ineligible for a traditional checking account.

Fees associated with traditional checking accounts have also driven disruption to payments. Simply put, Millennials and Generation Z have less disposable income than previous generations and have less affinity for tradition than their parents.

The Fork in the Road

In leading a social enterprise, I constantly ask myself are we offering a product simply to make money, or can this product successfully create positive social change? This question faces Amazon as well.

The benefit I notice most in the flood of Amazon services, is how they expand access to broader populations. Amazon Prime and Prime Now, for example, help homebound persons buy what they need without relying on someone else’s help or schedule.

Millennials and Generation Z are used to ‘made for me’ experiences. To get them on board, Amazon must create experiences that are not only pleasant, but exceed expectations–  a challenge that many large banks have failed to solve with their ventures.

Amazon was founded on serving customer’s needs. A lean, functional, and above all, easy to use platform is key. But this may require much more than one bank partner.

What Do Partners Bring to the Table?

Although JPMorgan Chase has many advantages, I believe that having just one banking partner will limit Amazon’s offerings.

Converting users to consumers will require focus on many niches; Millennials, Generation Z, low-income, etc. A single bank partner, especially a large bank, will drastically limit access to these markets. Why?, big banks have left middle and lower-income segments behind.

My solution? Partner with smaller, innovative banks in addition to larger institutions like JPMorgan Chase.

A large holding company will be able to handle the massive volume that comes with Amazon. However, the key to disruption in the any sector is agility and  big banks are far too clunky and siloed for the rapid adaptive innovation required.

Thanks to their history of disruption and innovation, I’ve always thought of Amazon more as a tech company than retailer. Fintechs these days are used to partnering with many organizations, and Amazon can take a page from their playbook.

The Future

There is no doubt that Amazon’s entry into banking will ruffle feathers. I welcome the change, it is something that we, at Sunrise Banks, have been supporting through partnerships helping us to continually adapt offerings to meet the needs of our customers.

I see Amazon becoming an aggregator of financial services, varying each product by not only market, but also by the partners supporting them. They have the ability to offer a range of services all in one easy to useplatform – not only banking but insurance, mortgages, credit building tools.

The future is now Amazon’s ball. I know that they will use this opportunity to change banking, I hope that they use their reach to change it for the better.


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