Last week Bain and Company released a published an article titled Banking’s Amazon Moment. I think its fair to say that it has caused a storm, Amazon are disrupting virtually every industry they get into. Couple that with the Fintech threat (or is it?) and it accelerates-heightens previous concerns about technology companies and you have bankers wondering what the heck happened to their lunch!
The Bain and Company article is well worth a read, but it was accompanied by an infographic (see below) which nicely summarises the report.
Is Amazon about to Eat Banking’s Lunch..?
Key themes from the article and infographic:
- Amazon’s vision:
- “Our vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online”
- Amazon is looking to work with a bank to offer co-branded mobile friendly accounts to young adults in the US
- Bain and Company propose this to be a good idea since:
- Amazon has a digital relationship with most Americans
- No need for bank branches and bank contact centres cost banks about 40% of their retail bank costs – you just ask Alexa!
- Payments could potentially be made directly from customer accounts, rather than through credit cards, saving Amazon interchange fees (about 2%) which amount to $250 million in credit card fees
- Banking services could grow to about 70 million customers over 5 years, the equivalent of the 3rd largest bank in the US
- Customers are ready to purchase financial products from technology companies
- Amazon has “Digital prowess”, a huge customer base, a culture that puts the customer experience first and few barriers to enable the move into banking
- When it comes to dealing with your money, PayPal and Amazon are the most trusted tech companies
- In Asia companies such as Alibaba and Rakuten have already moved into financial services, and fast becoming market leaders
- Bain and Company suggest banks make 3 changes:
- Put their customers first
- Move quickly, avoid slow decision making by committee
- Opening up, partner with innovative providers and use new channels to improve data analysis and the customer experience