Amazon possesses tremendous potential to expand in the financial services field, however, it is unlikely to build a “standalone” banking operation in the near future, as per the leading global investment banking, securities and investment management firm, Goldman Sachs.
Earlier on Tuesday, May 22nd , analysts at Goldman Sachs revealed via a note, that given the fact that Amazon has an extremely vast amount of shopping data and also its base of more than a 100 million Prime customers, it puts the company in a unique position to become one of the leading players in the finance space. Also, providing further support for this move is the fact that consumers are responding really well and have shown actual intend for buying financial products from tech companies.
However, the possibility of Amazon launching a standalone banking service is highly unlikely because of the added regulatory burden and credit risk that would follow.
The note published by Goldman Sachs reads as follows, “Despite Amazon’s opportunity to expand in financial services, we believe the highly regulated nature of the industry and an unwillingness to take on credit risk on its balance sheet will temper its aspirations to build a standalone banking operation.”
Rather, the analysts anticipated that Amazon will focal primarily on offering “complementary” services through bank partnerships that are essentially intended to drive sales volume and traffic to its e-commerce website.
In order to grow its merchant lending program, Amazon has revealed that it would be partnering with Bank of America, several reports have also hinted that Amazon is reportedly working with J.P. Morgan and Capital One for a new “checking-account-like” product.
Currently Amazon offers several different financial products such as Amazon Pay a PayPal-like service that permits shoppers to make purchases through their Amazon accounts, Amazon Lending is an online lending program offered exclusively to Amazon sellers, and the recently launched Amazon Cash, which lets customers move money from gift cards to their Amazon accounts, and also some co-branded credit cards.