Amazon has vast potential to expand in the financial services
field, but it's unlikely to build a "standalone" banking operation
anytime soon, according to Goldman Sachs.
In a note published Tuesday, analysts at Goldman Sachs wrote
that Amazon's base of over 100 million Prime customers and its vast amount of
shopping data puts the company in a unique position to become a major player in
the finance space. At the same time, consumers are showing that they'll buy
financial products from tech companies.
But Amazon is unlikely to open a standalone banking service because of
the added regulatory burden and credit risk that would follow.
"Despite Amazon's opportunity to expand in financial services, we
believe the highly regulated nature of the industry and an unwillingness to
take on credit risk on its balance sheet will temper its aspirations to build a
standalone banking operation," Goldman Sachs wrote in the note.
Instead, the analysts predicted that Amazon will remain focused on
offering "complementary" services through bank partnerships that are
primarily designed to drive sales volume and traffic to its e-commerce site.
Amazon is partnering with Bank of America for
its merchant lending program, and is reportedly working with J.P. Morgan and Capital Onefor
a new "checking-account-like" product.
Amazon currently offers a number of different financial products. Amazon
Pay is a PayPal-like service that allows shoppers to buy through their Amazon
accounts. Amazon Lending is an online lending program offered exclusively to
Amazon sellers. The company also launched Amazon Cash, which lets customers
move money from gift cards to their Amazon accounts, as well as some co-branded
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