How Can Big Online Retailers Change Affinity Online Banking?
发布时间:2019年04月16日
发布人:nanyuzi  

How Can Big Online Retailers Change Affinity Online Banking?


Brian Edmondson


There are some major shakeups going on right now in the banking industry, including the development of many online-only banks that offer higher interest rates and lower fees than their brick and mortar counterparts. Another development that is rapidly taking shape is that big online retailers – like Amazon – are starting to dip their toe into banking.


While Amazon isn’t offering any direct banking services yet (although you CAN buy pre-paid debit cards on the site) the Wall Street Journal reported that Amazon is in talks with some of the big United States banking institutions to offer Amazon-branded checking accounts.


This has the potential to change the affinity online banking world in a major way.


What is affinity online banking?

 

Affinity online banking is banking that is geared toward a specific type of customer instead of the general public. Brick and mortar credit unions have long used this strategy by being chartered by teachers, firefighters or military personnel. But unlike credit unions – which are often only open to a particular qualified membership base – affinity online banking is usually open to the general public but is marketed with a specific group or angle in mind.


For instance, SFGI Direct, an online-only bank that ONLY offers high-yield FDIC insurance backed savings accounts specifically markets itself to people who are looking for an easy and reliable way to save that will pay them some money in interest. The people who deposit in these accounts aren’t folks who want a full bank experience, they just want a reliable and safe way to save.


This has worked well for many online-only banks, but that dynamic could change with players like Amazon looking to get into the affinity online banking space. Because Amazon has such a large customer base, it could add banking members very quickly.

 

What affinity online banking products is Amazon looking at offering?

 

Amazon hasn’t made any official announcements yet but is reportedly in talks with Capital One and JP Morgan Chase to offer an Amazon-branded checking account or a similar product.


Some analysts think that Amazon might bundle its checking account in with its Prime service – which offers free 2-day shipping across the site as well as movies, music, and other benefits; or they might end up offering it as a separate product. It’s too early to tell.


For Amazon, a checking account offering would be another perk to doing business with them and not their core business – although it would inform their core business, which is data. If Amazon gets into banking services, then they will likely know everything you purchase through your Amazon-branded checking account, and not JUST what you purchase on their platform.


Even with this huge potential, Amazon is unlikely to go into affinity online banking directly.


Why Amazon needs the banks to make this work?

 

Banking is a highly regulated industry and is constantly under scrutiny from regulatory bodies. Amazon is not likely to want to be under that kind of oversight, so the move to partner with another banking institution is probably the way they will go if they end up getting into banking. That way they can let the bank handle all of the regulations, while they offer the branding and customer base.


What effect will affinity online banking have on banks?

 

Since these negotiations only appear to be in the preliminary stages of negotiation, it’s hard to tell. Amazon may end up serving mostly the “unbanked” or they may be a disruptive force in the banking industry. My guess, based on their current business models and past acquisitions, is that they are looking to become a major disruptive force in banking and that traditional banks will need to adapt to the changing landscape.


Should you get an Amazon checking account if it’s offered?

 

That depends. If you are comfortable with Amazon using the data from that checking account to offer you tailored goods and services it might be something you really like. If you prefer to keep your data more private, then you are better off banking at a regional or local institution. Either way, you will want to make sure that Amazon’s offerings are FDIC insured and that your money is secure.