What's going on?
It’s got designs on groceries, delivery and even healthcare – and now banking may be next. According to the Wall Street Journal, Amazon is in talks with banks including JPMorgan Chase to start offering its customers a product similar to a bank account (tweet this).
What does this mean?
While there are likely several reasons for the move, a foray into banking would help Amazon cut down on the fees it currently pays financial firms when processing customer payments. By offering customers an account where they can deposit their paychecks, for example, Amazon could debit that account directly for purchases, cutting out the middleman.
Although nothing official has yet been announced, it seems Amazon is looking to partner up with existing banks, rather than trying to market its own bank accounts… at least for now.
Why should I care?
The bigger picture: Financial upstarts often work alongside existing banks.
As fresh-faced “fintech” firms handle increasing volumes of customer payments and even start accepting deposits, there’s been speculation that traditional retail banks are set to go the way of the floppy disk. But they may not be finished just yet: the heavy burden of regulations faced by banks, long bemoaned by some in the industry, is now helping protect them from many challengers who find the significant hurdles too high to clear alone.
For you personally: Your data is valuable – don’t forget it!
Amazon would just love to link up data from its customers with information from their bank accounts. By doing so, it would be able to suggest highly targeted purchases based on when, where and how you tend to spend your cash. More generally, the forthcoming rollout of new “open banking” rules like Europe’s PSD 2 isn’t just good news for people trying to sell you stuff: it’ll also let you force your bank to share your financial data with firms who can help suggest ways for you to save money.