Amazon.com, Inc. AMZN 0.3% has become a massive success over time by
taking an aggressive approach to exploring and adopting cutting-edge
technology. In recent months, Amazon has been investing heavily in fintech initiatives
with a particular focus on the huge, high-growth Indian market.
Betting On Fintech
Back in February, Amazon was one of several investors that
provided $16 million in funding to Greenlight Financial Technology. Greenlight
is a Georgia-based firm developing a smart debit card designed specifically for
children. The debit card allows parents to monitor and manage their children’s
spending using a smartphone app.
In March, Amazon announced it was providing $30 million in
additional funding to its digital payments subsidiary Amazon Pay. The latest
funding comes after Amazon designated $40 million in funding for Amazon Pay’s
India operation in late 2017. Amazon has said it would increase its investment
in the digital payments subsidiary fivefold in the next several years.
In April, Indian online lender Capital Float announced it
raised $22 million in new funding from Amazon as part of its $67-million Series
C fundraising round. Capital Float has partnered with Amazon India to provide
loans to e-commerce sellers. Capital Float said it issues more than 10,000
loans per month, has an outstanding loan portfolio of $170 million and has a
default rate of about 2 percent. Roughly 70 percent of its loans are microloans
of less than $7,600.
Late in May, Indian online insurance startup Acko announced
that Amazon was the leading investor in the company’s $12-million fundraising
round. Acko aims to bring a technology-centric approach to the insurance
business and recently received in-principle regulatory clearance to launch its
business in India. According to Inc42, only about 3 percent of the transactions
in the $80-billion Indian insurance market take place online.
Why India?
Amazon seems to be targeting India’s fintech market in particular for
several reasons.
India’s economy is the sixth-largest in the world, but it is growing at
a much higher rate than most other economies of a similar size.
Indian citizens have much less access to banks and financial services
than U.S. citizens. As of 2015, there were 233 million Indians who didn’t have any
kind of bank account, much less access to banking apps, online financial
services or digital payment options.
Amazon appears to see India’s size, growth potential and addressable
financial market as a golden opportunity for fintech investments. Just this
week, it was reported the company will raise its total investment in
India from $5 billion to $7 billion.
If this trend continues, investors can expect to see more fintech
investments from Amazon in and the potential for major returns on those
investments in years to come.
Click here for the original article from Benzinga.