The Bank of Amazon?

Just imagine...

  • Your portfolio of funds being rated by the public
  • Comments and conversations about your money management philosophy are open for display
  • Peer recommendations now accompany your client reports
  • Financial documents flying down from a drone to your office
  • Virtual reality agents giving you advice from your cabin in the woods

This could be your not too distant future. Amazon, the ubiquitous market maker that has transformed nearly every facet of modern commerce, has yet to set its target on financial services but, if public sentiment has anything to do with it, that notion could very well change sometime soon.

A recent study from consulting firm Bain has shed new light on consumer expectations regarding both Amazon's services as well as the average consumer's view of the banking industry. While the study does, in fact, concentrate on the banking sector, it's not much of a stretch to see the factors driving such thoughts apply to financial services as a whole.

Xinn's Perspective

As creators of a robust, efficient, and technologically-driven future in financial services, Xinn is both delighted and alarmed to see such a stark realization. The time has come to embrace that future because, no matter the firm, it's a fine line between venerable and vulnerable, particularly when maneuvering away from the outstretched arms of Amazon and its seemingly limitless reach.

Whether you deem this a call to arms, a splash of cold water to the face, or just a simple nudge to awaken from an afternoon nap, Xinn thinks it's quite possible for the financial services industry to have its proverbial cage rattled by the online giant. Unless firms address the following factors, Xinn foresees a possible turbulent future in financial services at the hands of a formidable new foe. As we all know, given the last 20 years in the industry, an additional source of turbulence is the last thing anyone needs.

Customer Satisfaction

Some firms shoot themselves in the foot, others are merely victims of circumstance. No matter the cause, however, there's an inevitable truth that every company in the financial services sector must face -- the industry still suffers from an image problem. Granted, most companies have made great strides since the dark days of 2008, but the investing public can have the memory of an elephant, making it difficult to evolve and progress passed transgressions of old. In 2017, financial services ranked last of all major economic sectors in consumer trust which, obviously, doesn't instill faith in its ability to ward off an aggressive new competitor.

shutterstock_522153415Amazon, on the other hand, suffers from no such issues, with 65% of respondents stating they would be open to giving the Bank of Amazon an honest try. Likewise, with a score of 86 on 2017's American Customer Satisfaction Index (ASCI) from 2017, the highest rank of any corporation for quality and value, the industry should expect any disruption from the likes of Amazon to be effective in capturing substantial market share.


Financial services, at least in the traditional sense of the industry, isn't exactly nimble. Most larger firms have an extensive footprint that is dependent on a sprawling workforce to accomplish even the most remedial of tasks. The 


resulting costshave a significant impact on the bottom line, forcing firms to parlay those costs to their customer base which only exaggerates their current customer satisfaction ratings. A provider like Amazon, however, is streamlined for a digital economy, already embracing technology to automate resource-consuming tasks to minimize their costs of labor. Their 40% margins, a full 15% higher than their closest competitor, speaks to the effectiveness of their approach.


Since we're on the subject of labor costs and automation, technology is a critical salve to combat the financial industry's fixed cost woes. Unfortunately, although there has certainly been an uptick in the sector's willingness to embrace innovation, it still trails other areas of commerce in that particular department.

However, just looking at Xinn's own platform, for instance, the sector stands to realize significant cost efficiencies in presentation and compliance needs, reporting costs, and a host of other areas by automating processes, removing needless redundancies, and eliminating the substantial costs associated with human error. Of course, Amazon is at the forefront of embracing emerging technologies and will not hesitate to implement any source of improved operations, whether it's in the supply chain or financial services.

A Look Ahead

While our thesis still deals in the hypothetical realm, that doesn't mean it's outlandish or even unlikely. Moving into financial services is a logical next step for Amazon, an area it has yet to tap or leverage its brand power, recognition, or loyalty within. Although the retail side of financial services would be the first to be impacted, institutional firms wouldn't be far behind if Amazon was successful in their efforts.

shutterstock_1107742586Even if Amazon were to stay out of this particular market, the truth is a comparable firm is already out there, ready, willing, and able to exploit some of the pain points that make the entire industry vulnerable to a digitally-driven, low-cost approach on a massive level. Maybe this is, in fact, a call to arms from Xinn for financial firms, a plea to quickly embrace the future before a new participant from Seattle forever changes the landscape. Because if that were to happen, nothing would be the same again, even for the biggest, most influential of financial services firms.

About the Author

Jeff Williams is a Customer Advocate and Director of Content and Design at Xinn. His main passion is to design next generation communication technologies that match the direct needs of today's complex business and financial world.