The concept of Amazon Bank could be about to move a stage forward as the tech giant talks to US banks about opening current accounts in the US in partnership with them.
According to reports, Amazon is talking to JPMorgan about potentially setting up checking accounts – the US equivalent of current accounts – for younger people or the unbanked.
Discussions are at an early stage, the reports state, but the partnership approach – where Amazon would work with a bank to offer an account – could be a way for technology companies to get into financial services.
Although Google Bank is the often-used term to refer to the big tech players entering the banking sector, Amazon is also seen as likely example.
The premise is that the big tech players already combine the processing power and security know-how needed to safely store and process financial data and transactions of millions of people, combined with customer-friendly usability.
Unlike the banks, however, they do not face the same level of regulation, although this would change if they offered banking services.
Read more about Google Bank theory
- Like Uber Google has become a default name for digital disruption in industries. But Google, the internet giant, has even been talked of as a potential bank.
- Consumers in Europe increasingly consider companies such as Facebook and Google as potential financial services providers.
- The search for the Holy Grail that is Google Bank has been going on ever since digital banking took hold. It makes sense: a company that processes millions of transactions on a daily basis whose bread and butter is making online services user-friendly.
“If the big tech firms like Apple, Google, Microsoft, PayPal, Amazon and others wish to get into specific financial services, I think they have the power to beat the banks,” said an IT professional in the banking sector. “But increasing regulation and deglobalisation of financial services may put them off.”
He said being a bank is expensive, difficult and does not always provide the best financial returns. “If a tech firm wanted to make most return on its money, it might aim to sell services to banks or partner with them, rather than compete with them.”
But he added there could be scope for the banks to become suppliers of banking services to tech firms. While the tech firm will be the brand and make decisions on products and interest rates, banks could provide them with a “white label” service in the back end. This might include all the regulatory compliance required, as well as financial expertise.
“Banks might become suppliers to the big internet companies. This would enable them to get into banking without going through the pain of becoming a bank – tech companies the public face and making decisions on products, with the banks behind the scenes,” he added.