Amazon Is a Threat to Banks — Just Not in the Way You Think

by Brian Riley 0

 Interesting article; rather than talking about cannibalising bank customers with new fangled products, the focus is on infrastructure.

• Amazon is disrupting banks, but not because they’re stealing customers; because they’re becoming more and more dependent on public clouds like Amazon Web Services

• Amazon may not want to displace banks that could be its best AWS customers. If anything, PayPal is more of a threat to them.

Amazon is easy to do business with as a consumer; it looks like they transported the easy features into their B2B business.

• we’re seeing an Amazonification of financial services — whereby the incumbent banks are platforms for all other non-bank providers of financial services to plug into — legacy firms aren’t actually losing accounts to Amazon.

• But, they are losing direct interactions with customers. For example, USAA and Capital One are both experimenting with Amazon’s digital assistant Alexa as a new consumer banking channel.

Chase is demanding but good to their vendors. If you can wedge into their procurement standards, there is the opportunity for an extended relationship, though you must be willing to serve their business requirements.


• The WEF report cites JPMorgan Chase as an AWS customer, though the bank itself avoided naming vendors. In 2016, JPM spent 16 percent ($9.5 billion) of its budget on technology.

• Then-chief operating officer Matt Zames, who left JPM in June, said in the company’s annual report in April that it has been pursuing a hybrid private-public cloud strategy. Last year it launched Gaia, its private cloud platform; this spring it began running applications in the public cloud.

So, another win for Amazon. Much bigger than Whole Foods, and who knows, maybe the strategies will all meet in the middle.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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