Bezos May Be Stepping Down, But Amazon’s Banking Ambitions Remain

The architect of 'The Everything Store' may be moving to a different role, but the behemoth he built — and the team that did the heavy lifting — will offer financial institutions both competition and partnership opportunity.

One thing you can’t order just yet on Amazon is a working crystal ball. But you can make an educated guess.

Jeff Bezos, creator of Amazon, has announced plans to transition to the role of Executive Chair in the third quarter, passing the role of CEO to Andy Jassy, head of the company’s public cloud operation, Amazon Web Services, the company’s big moneymaker.

As the Wall Street Journal pointed out, Bezos has been stepping away from day-to-day responsibilities in favor of more developmental projects both inside and outside the company for some time, so this will return him to that strategy after more involvement during the pandemic. In an email to Amazon employees, Bezos said that he would focus his attention on new products and early initiatives.

Jassy is a big believer in multiple technologies that tie into AWS services, such as connected devices like Amazon’s own Alexa as well as the internet of things in general. He has spoken of Amazon’s serious devotion to artificial intelligence and machine learning and about the central role that data analytics will play in business going forward.

What’s Next:

Commentators seem to think Jassy is a disciple of Bezos, not likely to pursue major new directions, and Bezos isn’t moving to the moon yet. (Space exploration is a big deal to him and Alexa was designed to be like the talking omnipresent computer on Star Trek.)

Bankers and credit union executives and just about every other business can expect more of what Brad Stone describes, in the preface to his book, The Everything Store: Jeff Bezos and the Age of Amazon:

Relentless and ruthless. Those words show up repeatedly in the following pages. Getting the lethal combination precisely right has been Bezo’s prodigious talent and perhaps Amazon’s greatest asset.”

For Bezo’s part, he’ll be able to concentrate on longer-range efforts, some of which will fly, and some of which won’t. Big techs like Amazon routinely try a lot of ideas and see what works and what flops.

A pet project Bezos worked on with JPMorgan Chase Chairman and CEO Jamie Dimon — a friend who almost went to work for Bezos at one point — was Haven, an attempt to change the face of U.S. health care. The joint effort, also including Warren Buffet of Berkshire Hathaway, was set to sunset in February 2021. While the trio didn’t remake health care, the companies claimed to have learned a good deal in the process.

Read More: Amazon Pushing Deeper into Banking

Forecast: Amazon Will Be Relentless About Banking

In his email, Bezos gave what can be seen as Amazon’s manifesto: “Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more.

“The decision by Bezos to step down from his current position will most likely only strengthen the commitment to financial services by Amazon.”
— Jim Marous

“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive.”

Jassy’s AWS already works with numerous banking companies, as more move to the cloud. This includes Capital One, State Street and Barclays, as well as challenger brands such as Stripe, Starling, Monzo and Robinhood. There’s little doubt that Amazon’s efforts to crack the banking business will continue, as will its continuing growth in the payments business.

So says Jim Marous, Co-Publisher of The Financial Brand and Owner/CEO of the Digital Banking Report: “The decision by Bezos to step down from his current position will most likely only strengthen the commitment to financial services by Amazon. Not only is his replacement coming from an area of the business (AWS) that already serves the banking community, but there is a good chance that Bezos will focus more on innovation and expansion of services with his ‘free’ time.”

In fact, financial institutions have much they could learn from Amazon, according to Alyson Clarke, Principal Analyst at Forrester, who follows Amazon and other big techs. Clarke issued a report, “Learn From — Don’t Fear — The Tech Titans To Prepare For The Future Of Banking.” Something Amazon has over many traditional financial institutions is knowledge and in-depth understanding of their customers.

“Many institutions think they understand their customers — they don’t,” says Clarke. “They might have data that tells them about a consumer’s propensity to want a mortgage or a car loan, but they don’t know much else about them.”

Asked about the outlook for more developments in banking from Amazon now, Clarke says: “I don’t see Bezos leaving as having any material impact on Amazon’s approach or pace in financial services. And I still don’t think Amazon will — or need to — get a license and become a bank. Any ambitions they have can be done via partnerships.”

Indeed, as covered on The Financial Brand, David Solomon, Chairman and CEO at Goldman Sachs, said in 2020 at an investor event that the Apple Card was only the beginning of “banking as a service” partnerships. Now Goldman Sachs’ Marcus has started offering fixed-rate small lines of credit to Amazon sellers. This followed efforts to make inventory and operational loans to the third-party sellers.

Amazon Has Its Own Definition of Coopetition

In a recent interview about financial institutions’ urge to seek fintech and big tech partnerships, Ron Shevlin, Director of Research at Cornerstone Advisors, suggests that even when Amazon partners with a provider, that’s not the end of the story. Amazon’s core ecommerce business is built on working with myriad suppliers large and small, its own lines of goods, and multiple channels.

Reality Check:

“There’s no incentive for Amazon to limit the number of financial services providers it works with,” says Shevlin. So even though Amazon’s Bezos will be shifting roles, financial services in multiple shapes and forms remain in its periscope.

A potential battle of the big techs looms, too: Walmart’s formation of a fintech with Ribbit Capital could potentially come on line just as Amazon plays its next financial card.

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