Amazon is moving into financial services, and while they aren’t currently looking at wealth management, it may not be long before they do, according to InvestmentNews.
How Amazon Is Expanding into Finance, and What It Might Offer
Finance is seen as the last step for large tech firms, as they already control searching and advertising but rely on others for financial services, Jim Sinegal, a senior equity analyst at Morningstar, tells the publication. Amazon is in a strong position because of the large amounts of data in already has on customers’ incomes and spending habits, which is increasingly valuable as analytical tools improve, InvestmentNews writes. This will allow Amazon to disrupt traditional financial institutions, according to the publication.
Other large companies such as Walmart have failed to launch banks in the past due to regulatory hurdles, InvestmentNews writes. But Amazon is planning on partnering with an established financial institution such as JP Morgan Chase, which could result in a wide range of services, additional revenue and increased data-gathering for Amazon all while avoiding high regulatory costs, Sinegal tells the publication. The financial institution would, in turn, have access to Amazon’s technology and distribution network, InvestmentNews writes.
It is plausible that Amazon’s move into finance could lead to a robo-advisor, David Goldstone, the head analyst of BackEnd Benchmarking's Robo Report, tells the publication. However, it is unlikely to be a priority, he says, according to InvestmentNews. And savings, checking and lending services will come before wealth management, according to the publication. However, advisors should be aware of these changes and ensure that they are able to offer services that Amazon can’t, such as personal involvement with family and career and longevity planning, InvestmentNews writes.
Joe Duran, the chief executive of United Capital, believes it is inevitable that Amazon will move into finance considering their low transaction-processing costs, InvestmentNews writes. And despite a robo-advisor being unlikely for some time, advisors should pay attention: whatever Amazon does will have an impact on the whole industry, he tells the publication.
