Written by Mark Evans
The long anticipated move by Amazon into the banking sector will impact the industry is assessed in a recent Forrester report, giving the financial sector the options of winning like Amazon, partnering with Amazon or losing. In all case the arrival of the ex-bookseller cannot be ignored.
Forrester believes that Amazon will go after current accounts in an aggressive way, given that it pays card issuers around $1bn in processing fees on global transactions annually. By cutting these fees, Amazon can make products cheaper, and converting the existing 80m global Prime members into current account customers.
Although not clear at the time, with hindsight one can see that Amazon has been experimenting with financial services for years, starting with 1-Click shopping to provide a better checkout experience, offering more payment options and consumer and business credit cards in addition to business loans. In fact Amazon has been stalking the banking realm – and learning what works and what doesn't.
The report offers advice to banks, that they must adapt to the platform-dominated world, investing in systems that bring efficiency, security and reliability and will need to keep customers feeling emotionally valued – something the sector has not traditionally done well.