“The Amazon of Banking” – A Realistic Goal?

By | Finance

I’ve read a few articles this week describing the fintech sector as “the Amazon of banking.” Now that’s certainly a lofty and complimentary metaphor  – but what does it mean?

Put simply, Amazon revolutionized the e-commerce business through its intelligent and personalized collection and interpretation of a vast – and I do mean truly vast – quantity of customer information. And, just like Amazon, any financial institution will inevitably collect vast amounts of information about its clients. Your bank knows what you buy, how much you spend and whether you have anything saved. Amazon has learned that data alone, however, is not enough: the use of that data to provide a customer experience that goes above par is what sets the online retail giant apart from its competitors. Fintech lenders, too, leverage the ability to know their customers and personalize financial solutions according to their needs – it is this ability to drill down to individual customer profiles, and to compare those profiles against carefully made statistical models, that sets them apart from traditional banking organizations.


Like Amazon, the fintech space is dominated by the marketing paradigms of easy access to resources and minimal turn-around time. And yet, the parallel is not so clear at points. One publication changed its stance from about one year ago, when a contributor declared there could be no such thing as an Amazon of banking, only to have a second, entirely different contributor promote the ideal quality of Amazon-ness in a recent post. The polarity of this debate seems to stem from a disagreement about exactly which qualities of Amazon are enviable in the financial technology space.

Amazon, of course, invests so heavily in its customer knowledge process in order to maintain a continuous retail relationship with its customers over time, always attempting to know what they might be interested in buying next. In contrast, many fintech firms – such as Progressa – actually benefit from having accounts with a defined start and end point to their life cycles. Amazon also invests a relatively small amount of effort in selling proprietary products (such as Kindle) compared to its ability to aggregate inventory, distribute it efficiently, and allow online consumers to make the best pricing choices that work for them. In this regard, it is fundamentally different from a financial provider of almost any kind (save for comparators and calculators in the vein of Bankrate.com.)

Fintech firms have been hailed as disruptors of the financial space, and the onus has been on traditional firms to get more nimble and more customized as a response to this evolutionary move. Amazon stands out as the case study for an organization that has leveraged the power of agility to the highest degree, therefore cementing a comparison between the online retailer and the fintech sector in the minds of many. But consider Amazon’s scale: it owns a veritable cornucopia of companies, retailers and data engines alike. It has a massive internal and international infrastructure that, somewhat paradoxically, enables its agility. Amazon exists to amalgamate and supersede the retail space into a single, accessible stream of product, whereas the growth trajectory for fintech firms will likely depend more on collaboration and integration with major banks as opposed to dethroning their market segment.


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