Amazon is Eyeing the Banking Industry: Here is how Amazon is planning to break into Wall Street...

DawgStreet's picture
Rank: Orangutan | 327

Amazon is a just retail/tech company, right?

According to this article, it looks like finance is the next stop for Amazon:

Amazon.com Inc. AMZN is in talks with big banks including JPMorgan Chase & Co. about building a checking-account-like product the e-commerce giant could offer its customers, according to people familiar with the matter.

BUT

The effort is still in its early stages and may not come to fruition, the people said. The talks with financial firms are focused on creating a product that would appeal to younger customers and those without bank accounts. Whatever its final form, the initiative wouldn't involve Amazon becoming a bank, the people added.

So, does this mean that Amazon wants to be a bank without actually being called a bank? The article goes on to say that Amazon is looking to enter banking as a "partner" rather than a "disrupter" since it wants to avoid "capital rules and regulations".

Either way, Amazon has got Wall Street's attention:

The company's latest push also answers a question that bank executives have been asking with increasing worry: When will Amazon show up on their turf?

With millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor. Its more-than $700 billion market value eclipses the combined value of JPMorgan and Bank of America Corp , the two biggest U.S. banks.

I think this just adds to the idea that Amazon wants to dominate every aspect of our lives. Given its massive size and valuation, Amazon will certainly be able to compete with other banks if it chooses to, whether as a partner or by itself. Wall Street banks may be "too big to fail" but Amazon is bigger.

Do you think Amazon will be the next BB? Or is this just a harmless "partnership"?

Assuming Amazon follows through, do you think this will work out or do you think it will fail like the Sears and Dean Witter merger?

Let me know what you think.

Comments (23)

Mar 5, 2018

Bezos is slowly turning into Dr. Evil and is on a path for world domination.

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Mar 8, 2018

He will fail in that because he didn't spend 8 years in evil medical school.

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Mar 5, 2018

No idea why Amazon would even entertain entering the most regulated industry in America with among the lowest profit margins (depository banking). I still don't get entering into the grocery business, which has barely-there profit margins.

Mar 5, 2018

Amazon is all about volumes...not margins...so it actually makes sense

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Mar 5, 2018
Pizz:

Amazon is all about volumes...not margins...so it actually makes sense

Disagree. Low margin, high volume is fine (although it's a very poor use of investment capital). Low margin, high volume with unbelievable regulatory burden makes no sense (e.g. banking). Last time I looked (like 18 months ago), literally zero banks had been created from 2009 until 2016 (except for 1 Amish bank). Rational investors don't enter a low margin business when it requires a huge amount of regulatory risk.

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Mar 6, 2018

Doesn't alibaba do a bunch of banking.

Curious but how big could amazon become before they face regulatory issues.

I don't know if I would want to live in a world where amazon is my bank, retailor, and doctor (plus 5-6 other major industries)

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Mar 8, 2018

Amazon is a giant SEX DUNGEON?

Mar 8, 2018

So will they be turning their real estate into banks? Amazon Bank.

Mar 8, 2018

Maybe they should take the store card in-house if it isn't already.

Reminds me of GE finance btw

Mar 6, 2018

You can't really use the "nobody else is doing it so it must be a bad idea" argument here. I'm sure as shit if Bezos had pitched his bat shit crazy idea of delivering from his garage everyone on this website would have laughed in his face.

Amazon already has everyone eating out of their hands with this "our new hub city" marketing bullshit.

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Mar 6, 2018

Bezos is all about transcendence and living forever, that's why he is merging his body with a machine

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Mar 6, 2018

Amazon is doing this for data and capturing more of the consumer ecosystem

You can tell SO much about people by how they spend their money. A person's financial history is essentially a proxy for determining what things/experiences they value (pay for) the most. With a consumer who banks with Amazon and shops on Amazon, the company can know you better than you know yourself and optimize the UX to make you spend more and stay in the ecosystem.

In today's world, the advantage in consumer banking comes from scale, efficiency, UX, and technology. While the giants like JPM and BAML spend billions on tech already, it's still playing catchup on a lot of its infrastructure. Amazon, technologically, can sweep in and offer a far better customer experience at a lower cost and leverage its existing data to further improve that experience in ways banks have no shot at. All this being said, who knows. Amazon might just dip their toe in the water and realize they don't want to deal with all the regulatory hurdles

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Mar 6, 2018

Bezos: Alexa, how can we stop the government from breaking us up and disrupting our plans of global domination?

Alexa: Buy the government. They are a high volume, negative margin business. Ripe for a turnaround story.

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Mar 6, 2018

could be the greatest downfall of amazon

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Mar 6, 2018
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