Fintech vs. Amazon: Three Insights From Bateman Group’s Influencer Dinner

Bateman Group recently hosted our first fintech influencer dinner in New York to discuss Amazon’s ambitions in the financial services space. It was clear early in 2018 that Amazon saw opportunities in the space, and the year has only confirmed that impression with the company’s push into checking accounts, health insurance and payments.

We had a smart group around the dinner table. From the fintech industry, we had executives from four companies (including two unicorns), not to mention a prominent VC investor and a tech leader from one of the largest banks in the country. From the media, seven reporters from business and tech press outlets attended to ask questions and share their observations. 

The conversation was insightful and occasionally feisty. Here are three of the most interesting takeaways:

1. Identity may be Amazon’s secret weapon in financial services.

Plenty of ink has been spilled in recent months about Amazon’s potential in the space. Most have focused on Amazon’s 100 million Prime members and its ability to serve up the kind of frictionless user interface that draws people into its new services. Neither of these makes Amazon unique: Facebook, Google and even Microsoft can all boast the same. What Amazon has that they lack is authentication: their users have years-long purchase histories, not to mention an email, physical address and multiple credit cards on file. With KYC-AML rules growing ever more stringent, that level of authentication makes the compliant onboarding of clients vastly easier.

2. Amazon could follow the AliPay model — but probably doesn’t want to.

The best example of a tech firm taking on financial services is AliPay in China. In this massive mobile market, consumers would rather house their money with a ubiquitous payments service rather than store it in a checking account. As a result, AliPay has an enormous asset base and the world’s single biggest money market fund. It has also set a precedent for payments companies doing much more than facilitate cashless transactions.

Amazon could mimic this success relatively easily. The logic for consumers is clear: interest on checking accounts is negligible, so why not store your cash with the Everything Store and earn some rewards in the process? The downside for Amazon is regulatory scrutiny. Regulators in Washington and all 50 states would likely demand that the Seattle giant goes through the hoops of banking regulations, with all financial services put on hold in the meantime. Amazon may decide that the reward just doesn’t match the cost.

3. Amazon doesn’t need a master plan.

Amazon’s push into financial services is already well underway in payments and small business loans. Eventually, we’ll see these services extend to joint checking accounts and health insurance. Naturally, the industry wants to put itself inside Jeff Bezos’s head and envision the end game. But the opportunity is so huge — and the company’s pockets so deep —  that the Seattle titan doesn’t need a grand vision: the company can simply chip away at various markets, adding revenue and customer lock-in at each step. Maybe someday the disparate services will all coalesce. For now, Amazon doesn’t need to think beyond the short-term.

Everyone at the table agreed this is a conversation that will only grow in importance. If you’re in the fintech industry, or if you’re watching the banks vs. fintech competition, this is a space to watch.

 

**Photo courtesy of Creative Commons