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Amazon’s Move into Financial Services: How the Retail Giant is Becoming a Bank

The e-commerce giant has been expanding its offerings over the years to become a one-stop shop for consumers. Recently, Amazon has been making moves into the financial services industry, offering services that banks typically provide. The company offers a credit card for customers that they can use for purchases on the Amazon website and at other retailers. It also offers a secured credit card, called the Amazon Credit Builder card, which can help customers build or rebuild their credit. Amazon also provides small and medium-sized businesses loans through its Amazon Lending program. And it is also working on a checking account product called Amazon Checking, which targets people who don’t have a bank account or have difficulty opening one. Amazon’s move into the financial services industry will likely impact traditional banks and other financial institutions significantly.

Introduction:

Amazon has been expanding its offerings over the years to become a one-stop shop for consumers. From groceries to streaming services, the company has been able to corner the market in many areas. Recently, Amazon has been making moves into the financial services industry, offering services that banks typically provide. This blog post will explore how Amazon is becoming a bank and what it means for consumers.

Amazon’s Credit Card and Loan Offerings:

One of the ways Amazon is becoming a bank is through its credit card and loan offerings. The company offers a credit card for customers for purchases on the Amazon website and at other retailers. This credit card, called the Amazon Prime Rewards Visa card, offers rewards for purchases made on the site, such as cashback on purchases. The company also offers a secured credit card, called the Amazon Credit Builder card, which can help customers build or rebuild their credit.

Amazon also offers small and medium-sized businesses loans through its Amazon Lending program. The program helps businesses purchase inventory and expand their operations. Amazon Lending has been around since 2011, and the company has reportedly loaned over $3 billion to more than 20,000 small businesses.

Amazon’s Checking Accounts:

Another way Amazon is becoming a bank is through its checking account offering. The company has been working on a checking account product called Amazon Checking for people who don’t have a bank account or have difficulty opening one. The product, which is still in the early stages of development, is being developed in partnership with several financial institutions, including JPMorgan Chase and Capital One.

Amazon’s checking accounts will offer a range of features, such as no monthly fees, no minimum balance, and the ability to deposit paychecks directly into the account. The accounts will also be linked to the customer’s Amazon account, making it easy to purchase on the site.

Amazon’s Impact on the Financial Services Industry:

Amazon’s move into the financial services industry will likely impact traditional banks and other financial institutions significantly. The company’s credit card and loan offerings will likely threaten traditional credit card companies and lenders. If successful, Amazon’s checking account offering could also take business away from traditional banks.

One reason Amazon can offer these financial services is that it has a large customer base, which gives it a lot of data on its customers’ economic behavior. This data can help the company underwrite loans and credit cards, enabling the company to offer more competitive rates and terms than traditional financial institutions.

Conclusion:

Amazon’s move into the financial services industry is a significant development likely to have a major impact on traditional banks and other financial institutions. The company’s credit card and loan offerings, as well as its checking account product, will provide customers with more options and may make it easier for people who don’t have a bank account or have difficulty opening one. As Amazon expands its offerings and uses its large customer base to its advantage, it will likely continue to disrupt the financial services industry.

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