Has Amazon dropped its plan for a bank account?
According to reports last year Amazon was talking to JPMorgan about potentially setting up checking accounts – the US equivalent of current accounts – for younger people or the unbanked.
With Google now planning to do just that with Citigroup and Stanford Federal Credit Union, Amazon’s plans spring to mind. Or lack of plans might be more apt as again, according to reports, it has abandoned these plans. A report in The Information said so anyway.
I asked Amazon if this was the case and a spokesperson told me: “Amazon does not comment on rumours or speculation.”
At one point it looked like Amazon was going to even beat Google in becoming Google Bank, as it were. The term Google Bank is often bandied around to describe one of the internet giants launching bank accounts rather than just services on the periphery of existing bank accounts.
But it emerged last week that Google will probably be first to create a Google bank after all.
That is unless some of the traditional banks become like Google before it manages to get a banking operation off the ground. I wrote an article last year, Don’t bank on Google Bank, bank on banks becoming Google-like, which described how banks with the regulatory approval and expertise could adopt the latest technologies to become a Google-like bank.
It is telling that according to reports Google will use traditional financial services companies, Citigroup and Stanford Federal Credit, to underpin a checking account. Similarly to Apple Card, which uses Goldman Sachs to provide the credit, it seems tech companies don’t really want to be banks, but want to be the favoured means of accessing banking services.
Back in 2014, analyst Forrester suggested as much. It said the tech firms partnering banks model is the best way forward. In its report Why Google bank won’t happen, Forrester said the high costs and strict regulation of setting up a traditional bank – alongside advertising revenue coming from banks – would push internet firms into roles that supported the relationship between banks and their customers.
But fintech has come on a long way since 2014 so what role will internet firms play and will they go beyond support a relationship between banks and their customers, as Forrester suggested?