Bank of Amazon? Online Retail Giant Considers Move Into Banking Services
Would you consider doing your banking with Amazon? According to a recent article on CNBC, the major online retailer may be considering such a move. However it appears the company is not looking to start an actual bank itself — instead, it’s considering offering banking products via partnerships. A survey of Amazon customers suggested the public may be quite interested, and it may even be possible that through Amazon.com banking products, cryptocurrencies could join the mix as well.
Subscribe to the Bitsonline YouTube channel for more great interviews featuring industry insiders & experts
Today, almost every American uses Amazon.com to purchase items, order groceries, arrange for in-home services, and stream content. Beyond the U.S., Amazon has also been rapidly expanding into other countries.
Not only that, but some in the business world suspect Amazon could even become the world’s first trillion dollar company. With that in mind, it doesn’t come as too much of a surprise that the online behemoth is considering moving into financial products.
According to the Wall Street Journal, the potential bank-like offerings from Amazon would likely target younger customers and those who may not have a bank account already.
The not-too-distant 2008 financial crisis is still fresh in the minds of many people under 40, leading many to distrust banks. Such lack of distrust could make this segment a potentially huge untapped market for financial services. A major driver in the explosive growth seen in cryptocurrencies, especially in the last 24 months, is a lack of trust in banks.
Rakuten, the Japanese multinational which most resembles Amazon in services offered, has already operated an online-only, “branch-free” bank for several years, with credit and debit cards, major loans and insurance.
Amazon Seeking Banking Partners
What’s interesting about this potential arrangement is that Amazon does not want to form its own bank. Instead, major news outlets are reporting that the retailer is in early talks with other big banks.
One such bank is JPMorgan, home of the famous flip-flopping Bitcoin naysayer, Jamie Dimon. This does not mean that Amazon.com will necessarily partner with one of these increasingly distrusted institutions. They may instead just be shopping around at this point.
If, however, Amazon will start to offer checking account style services, they will likely do so in direct competition with other low-cost and youth-focused alternatives. For example, Ally Bank and other online-only alternatives.
A survey done last month indicated that if Amazon were to get involved in cryptocurrency, or more specifically to create its own, a significant majority of its customers would be interested in taking part. Particularly, Amazon Prime users seemed the most interested in adopting an Amazon cryptocurrency.
The survey which was held by LendEDU and not Amazon itself, demonstrates that this could be a clear market victory. That is, of course, if Amazon is willing to take the risk.
This survey follows on the heels of other rumors that Amazon is considering accepting major cryptocurrencies like bitcoin or litecoin as a payment method. However, it’s important to remember that such rumors have circulated for years now, but have never been officially confirmed by anyone in a senior position at the company.
Speculating on Token Use Cases
If Amazon were to create its own cryptocurrency and allow its users to buy and sell the tokens within an Amazon-sponsored checking account, this could create a massive on-ramp and off-ramp that would suddenly allow many untold millions of people to have better access to cryptocurrency.
Not only that, but if the hypothetical Amazon Coins were spendable on Amazon.com at a specific and unchanging rate, say for instance $1 each, they could become a true “stablecoin”. Perhaps even one that cryptocurrency traders could use as a medium of exchange. This could be much like how Tether‘s USDT is used today. The coin’s price would be stabilized by their exchange rate at Amazon.com.
To be clear though, all of this is still just hypothetical. Amazon itself has not made any official statements about their intent to support or offer cryptocurrency.
A Real Competitor for the Banks
In countries around the world, interest rates for savings accounts have been dropping for years. Today, major banks like Bank of America offer a mere pittance of 0.01 percent interest on their standard savings accounts.
Online-only competitors like Ally Bank offer around 1 percent or so. But even that is still a far cry from where interest rates used to be a few decades ago. Back then, 5 percent or more was the norm.
Amazon has massive resources and brand trust. With that, they could put themselves in a position to offer a real alternative to the big banks. They could be an alternative to an industry famous for pocketing all the interest earned as profit, while giving almost nothing back to the customers.
If Amazon adds cryptocurrency support to such a banking product, the influence this has on the market could be substantial, to say the least.
What would you do, if you were running Amazon? Let us know in the comments.
Images via Amazon, Pixabay