SEATTLE–Credit unions have often discussed Amazon’s potential entry into financial services, and now one group of analysts believes the company could be poised to step through that door.
Analysts at Sanford C. Bernstein & Co. have published a report that suggests Amazon has “countless advantages” and should move to begin offering financial services, including not just a massive customer base including 100 million Prime subscribers, but also vast amounts of data on those customers. Moreover, the company has a strong reputation, the report notes.
"We think Amazon is well placed to disrupt the industry," the Bernstein & Co. report states.
The Bernstein & Co. analysis says Amazon might want to follow the example being set by one of its biggest competitors, China-based Alibaba’s Ant Financial, which now offers the world’s largest money market fund, and which also offers Alipay, its payments service. The company has also created a robo-service that uses artificial intelligence to suggest stocks, bonds and commodities for customers based on payment activity.
"This is a model other tech companies could follow," Bernstein stated in its report.
Alexa, Is This a Sign?
CNN.com noted that while Amazon hasn't announced a desire to enter wealth management, “there are signs Amazon could be targeting finance. It's reportedly considering a person-to-person payments feature for its popular Alexa virtual assistant. It could even let drivers in Alexa-enabled cars pay for gas by using their voice.”
As CUToday.info has also reported, Amazon has earlier had talks with JPMorgan Chase and other banks about setting up Amazon-branded checking accounts.
Still, the Bernstein analysis cautions that managing money is a completely different ballgame for Amazon and it includes the risk of damaging its reputation should things go wrong.
"There is a clear risk to the brand. A mistake in fund management is not the same as sending a faulty product," Bernstein wrote, adding Amazon would have to deal with a tangle of regulations that could lead it to lose focus.
On the other hand, observed the Bernstein paper, Amazon's strong status among consumers could give it a leg up in an industry that appears to suffer from a "lack of trust."