Amazon never seems to stop! Is an Amazon bank the next thing on their list? Quick Loans Express explores the likelihood of this possibility and what that would mean for traditional banks and customers.


Story Highlights:

  • Amazon Lending offers short term business loans from $1,000 – $750,000
  • 73% of millennial were excited of the prospect of new financial services from Amazon, Google or PayPal
  • Regulations can save traditional banks from the anticipated threat of an Amazon Bank.

An Amazon Bank?

Is there anything that Amazon won’t do? It looks like Amazon isn’t satisfied with their Amazon Prime, Amazon Echo, Amazon Dash, or even their Amazon Go store. They seem to have their hand in everything from gadgets to music and video streams– you might be thinking whatever next?

Amazon is very good at getting you to spend your money, so surely the next thing is for them to manage your money. There is speculation that the next project for Amazon is an Amazon bank!

But is this really likely? Should traditional banks dread the day Amazon takes over the banking sector? Quick Loans Express, your destination for small payday loans, explores the issue and gives you the facts.

Is Amazon already a bank?

In short, not really, although they do offer several bank-like services. Amazon already provides certain financial services to people around the world. For example, in the UK, consumers can apply for an Amazon Platinum Mastercard. They can collect points when they shop and benefit from the perks. However, Amazon doesn’t own the credit; instead, they offer the Mastercard on behalf of NewDay Ltd and act as a broker.


Furthermore, on an invitation-only basis, Amazon Lending offers short term business loans ranging from $1,000 – $750,000 to businesses that sell products on the Amazon platform. So far, they have already loaned over $3 billion to small businesses in the USA, UK and Japan. However, compared with other megabanks this is a relatively small amount for the timeframe. To give you an idea, major bank JP Morgan loaned $130 billion over the same period.

In places such as India and Mexico, Amazon offers unique payment services. In Mexico, you can store your money in a digital Amazon Wallet. Amazon also invests in certain small startup businesses that they view as potential assets to their company.

How Soon Can We Expect to See the Amazon Bank?

Seeing as Amazon is already offering credit cards, payday loans online, digital wallets and other financial services, it seems only natural to venture into banking properly. Ken Leon, a CFRA bank analyst, predicts that Amazon may buy a small or mid-sized bank in the next few years. This will help them gain ground in the industry and test the regulatory waters. However, this may either act as a step-up to the banking industry or a broad jump. Buying even a small bank could spell calamity for the company.


Others are more sceptical that Amazon will get a banking license to offer mortgages and other traditional banking services anytime soon.

Should Traditional Banks Be Worried?

In a Bain & Company Survey of more than 133,000 banking customers in 22 countries, the participants were asked if they would trust Amazon or PayPal with their money. 55% of Americans said they would. 73% of millennials were excited at the prospect of new financial services from Amazon, Google or PayPal in favour of using their bank.

It seems that Amazon poses a real threat to traditional banks. Although banks have been preparing in case big companies like Amazon and Google enter the banking sector, there may be no saving them. If Amazon bank becomes a reality, it would likely steal much of the profit from traditional banks. There may be no way for brick and mortar banks to withstand the enormous growth in the financial sector.


Can Regulations Halt the Amazon Bank?

Regulations might be able to save traditional banks from the anticipated threat of an Amazon Bank. It is likely that regulations set down by financial watchdogs, like the FCA which regulates instant payday loans, could stop Amazon becoming a major bank. For example, there is already a regulation in the US that prohibits companies in commerce engaging in banking activities. Hence, companies like Walmart can’t offer certain financial services. The regulations are in place for fear of the companies syphoning deposits or offering risky loans.

However, times are changing, and revised regulations may not be far behind, especially in the US. Keith Noreika, the temporary head of the Office of the Comptroller of the Currency (OCC), the agency that oversees U.S. national banks already pushed for change in 2017.

Nevertheless, this does not mean things will change. The regulatory boards still hold the upper hand, and traditional banks should not panic yet! Amazon is still far away from dominating the banking industry, and it’s unlikely that this tech giant would crush the regulated traditional banks any time soon. But it may not be too far off, so banks should proceed with caution.


Conclusion: Amazon Banking

In this article, Quick Loans Express discuss the next step Amazon is expected to take – particularly becoming a bank. Is Amazon banking the next step for the online retail giant? Even if it is, Amazon has quite a few hurdles to overcome before becoming a leading bank. They already offer several financial services to small companies and people around the world. However, regular banks still surpass them in terms of profit. The future does look bright for Amazon if they can get the Amazon bank off the ground. It appears that to Amazon, the sky is the limit. Stay tuned for the next Amazon project!



PUBLISHED BY
Taylor Rose
Taylor has been an avid writer since her early school days. At 5, she was creating candy floss planets where heroic candy canes stood up to the evil Russel Sprout. Later, she was documenting historic events, and her writing was always appreciated by all who read it. After working as a program developer for many years, she traded her successful career to make a living out of her writing skills. Nowadays, Taylor helps the Quick Loans Express blog bring current and useful information to people looking for helpful financial advice online – hopefully with a fun twist!

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