Amazon Could Have a Ready-Made Customer Base for a Bank, Bain Reports

With rumors circulating that Amazon.com Inc. is interested in getting into banking and also preparing to open thousands more cashier-less stores, new research results released by management-consulting firm Bain & Co. claim that a large pool of consumers would be willing to bank with the online retailing giant.

“Our survey suggests that Amazon can count on significant demand for basic banking services,” Boston-based Bain said in a report based on a survey of 6,000 consumers it did with Research Now Group Inc. of Plano, Texas.

The survey also found that 33% of Amazon Prime respondents—those who pay an annual fee for such perks as free two-day shipping—had used Amazon payment products in the past year, such as Amazon Cash, its private-label credit card, or its Visa Prime Rewards cobranded card issued by JPMorgan Chase & Co.

Some 65% of Amazon Prime customers said they would try a free, online checking account from Amazon if it offered 2% cash back on purchases, like Amazon’s cobranded credit card. Some 43% of non-Prime Amazon customers said they would try the account, and “even among people who don’t use Amazon for e-commerce purchases today, 37% would try it,” the report says.

With the exception of USAA, a specialty financial-services provider for military members and their families, Seattle-based Amazon is scoring far higher than banks in customer loyalty, according to Bain’s 2018 Loyalty in Banking Survey. One data element from that survey is Bain’s Net Promoter Score, derived from responses consumers gave when asked if they would recommend a company to friends or relatives, with higher numbers indicating more loyalty. USAA scored a 79; Amazon, 47; regional banks, 31, and national banks only 18.

“The threat [to banks] from Amazon is real and imminent,” Bain’s report says. “Moving into basic banking would not only save Amazon on [payment card] interchange costs, but also give it more direct influence and insight into customers’ finances and spending, rather than having banks as the intermediary. The bank account could become a platform for a whole new range of services for a company that already has enormous reach among America’s most valuable banking customers.” The report claims Amazon customers control 75% of U.S. household wealth, with Prime customers alone controlling 45%.

Meanwhile, citing unnamed sources, the Bloomberg news service reported Wednesday that Amazon might open as many as 3,000 cashier-less Amazon Go stores by 2021. Currently there are only four Amazon Go stores, three in Seattle and the newest in Chicago. A massive expansion would not only create new competition for convenience-store chains such as 7-Eleven, but also for sandwich and fast-casual restaurants, pizza chains, and food trucks if time-pressed consumers gravitate to Amazon Go for take-out meals.