SEATTLE–Amazon is reportedly in discussions with several big banks, including JPMorgan Chase, about creating a checking-like product that it could offer to its customers.
There has long been discussion within credit unions about the potential effects of any entry by Amazon into financial services.
Discussions are still in their early stages and may not come to fruition, sources told the Wall Street Journal. The talks with the big banks are focused on creating a product that would appeal to younger customers and those without bank accounts, the Journal reported.
Whatever its final form, the initiative wouldn’t involve Amazon becoming a bank, sources indicated.
One objective in offering a product that is similar to an own-branded bank account, the Journal reported, would be to help reduce the fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits.
“With millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor,” said the Journal. “It’s more-than $700-billion market value eclipses the combined value of JPMorgan and Bank of America Corp., the two largest U.S. banks.
In the fall of 2017 Amazon put out a request for proposals from several banks for a hybrid-type checking account and is weighing pitches from several firms, including JPMorgan and Capital One Financial Corp., the Journal reported. There is no information at this point on exactly what a financial product from Amazon would look like.
“Amazon’s collaborative approach supports what bank executives have long said: that new regulations put in place after the financial crisis, while bad for profitability, are a protective moat against challengers,” the Journal reported. “Any move by Amazon to start its own banking arm would subject it to capital rules and other regulations that likely would limit its aggressive expansion. And there would likely be stiff opposition.”