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

Banking’s Amazon Moment

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