The Office of the Comptroller of the Currency (OCC) announced that it will consider applications for fintech charters, which means Amazon could apply. However, many anticipate that Amazon will integrate more fintech services without forming a traditional bank, as it would require them to set aside huge amounts of capital, which they can currently use to grow. Amazon is on the path to building a bank for Amazon, rather than the Bank of Amazon… for now.
Amazon also has some advantages over traditional banks and credit unions:
- Cash to burn. As one of the largest companies, Amazon has deep pockets to pull from. To get their payments program off the ground in India, they have spent more than $27 million in capital to produce just over $1 million in payments.
- Room for failure. Amazon’s strategy has never included a fear of failure. They value innovation and are not afraid to run with new ideas that may not pan out. They are pros at taking a loss and reworking it into a success.
- Massive captive audience. They have roughly 310 million active customers, 100 million Prime customers, 50 million Echo owners, and 5 million sellers. They have been able to cross-sell and up-sell their customer base at impressive rates, which means it’s likely they could get them to jump on board with their banking services too.
- Incredible customer data. While credit unions are known to keep significant data on their members, Amazon has even more experience in the data realm. From years of customer transactions, as well as data from streaming platforms via Amazon Prime, they have a deep log of personal information telling them what their customers watch and what they buy.
There are a lot of doors open to Amazon and only time will tell in what direction they take their financial service platforms. They have already begun dabbling in payments, cash deposits, credit cards, lending, and even insurance. The sky's the limit for Amazon, and it will bode well for credit unions to keep an eye on their financial services ventures, as they could quickly become a force to be reckoned with in the credit union industry.