The global e-Commerce giant is still looking for ways to expand its services and, in this case, once again leaving the borders of the online retail sector. As The Wall Street Journal advanced in early March, 2018, Amazon is negotiating with several US banks, including JP Morgan Chase, to offer its customers a financial product similar to a checking account.
According to the New York financial newspaper, the target audience to which this new service could be directed, if at all, would be the youngest users of Amazon and those who do not have a bank account, a common phenomenon in the US among the rents lower, which is the population segment that has so far resisted the company of Jeff Bezos.
Strategic alliances with banking
With this project, still in the initial phase, the digital retailer seeks to reduce its collection costs, expand the relationship with the already loyal users and reach these new market niches. In other words, Amazon seeks to continue expanding its presence in each of the facets of private consumption and diversify its activity to ensure that it maintains its growth.
However, despite what might seem, this decision does not mean that Amazon becomes a full-fledged bank, but this new strategy would involve creating alliances with established banking entities. Thus, the marketplace avoids having to pass the scrutiny of financial regulators and adapt to the regulations of the sector, in exchange for offering its banking partner an extensive customer base.
This is not the first decision of Amazon that brings you closer to the fintech sector. In fact, the company already launched in 2011 Amazon Lending, a platform for loans to SMEs that offers up to $ 750,000 to companies that do not get financing in traditional banking. According to the company itself, this service has exceeded 2,500 million dollars in loans granted in its five years of life.
Diversification and disruption
This incursion of Amazon into the financial world is part of the diversification strategy of the US company to expand its range of activities. Within this initiative, the launch of Prime and its audiovisual content services, the supermarkets without Amazon Go ATMs, the purchase of the Whole Foods retail chain, its Echo speakers or the Kindle e-books line, among others, are part of this initiative.
In addition, Amazon has also set its sights on the healthcare sector, initially in order to create an insurer that covers its employees with the help of investor Berkshire Hathaway and JP Morgan Chase. This movement has already caused two important mergers between the US health sector, especially because of the disruptive effect that Amazon’s landing has on any business activity.