India and Mexico Get an Early Taste of the ‘Bank of Amazon’
Amazon is showing signs of its fintech and insurance strategy in India and Mexico by acquiring startups, offering alternative payment services in cash-heavy countries.
In India, Amazon has a doorstep cash-pickup service that lets customers load money into a digital wallet. It has also acquired or invested in several startups there, including Emvantage Payments and BankBazaar. In Mexico, Amazon has a cash payment service meant to be an alternative to a credit or debit card.
Amazon is also said to be investing circa $15.7 million in Indian insurtech Acko, which provides online-only insurance products. Under the deal, Amazon's Indian business will reportedly act as Acko's distributor, and co-develop new insurance products with the company.
The retail giant already offers multiple financial products including SMB lending and Amazon Protect, an accident coverage program, so gaining access to Acko's product suite would further boost its standing as a financial services provider.
“Amazon, Google and Facebook own two critically important items when it comes to being successful at consumer payments and loans: 1) the data and 2) the relationship with the customer,” said Brendan Wallace, co-founder and managing partner of Fifth Wall Ventures. “It’s inevitable that they will move deeper into finance to capitalize on this advantage.”
Amazon’s lack of traditional banking services in the US is made up by its payments and lending platform, which are growing by the minute. Over 33 million people use Amazon’s payment system, and it has lent more than $3 billion to merchants on the platform since 2011. Early last year, the company introduced Amazon Cash, where users can load funds onto their Amazon account.
The risk posed by GAFA innovation appears to be seriously underestimated by banking IT leaders and their boards of director. Less than 5% of respondents identified the temptation of new technology, such as mobile apps, as the biggest reason for customers to switch banks.