Is the Next Big Bank a Bank?

Amazon recently announced that its Amazon Lending service surpassed $1billion in small business loans over the past 12 months.

Wait, Amazon? Small business loans? Amazon isn’t a bank, but that doesn’t seem to matter. And that got me thinking, could Amazon be a bank for consumers, too?

Most likely, yes. Trust is the foundation of any relationship, especially when money is involved. Market Strategies’ financial services market research reveals that half of consumers would trust a company that does not specialize in banking to provide their banking. Of those, 26% would trust Amazon, 22% would trust Apple, 21% would trust Google and a whopping 63% would trust PayPal. Not surprisingly, younger consumers (58% of those 18-34) are even more likely to trust a non-bank to provide their banking.

Two factors indicate this is likely to increase:

  1. Relationships are digital. As mobile usage increases for all service providers, especially in the banking industry, consumers’ relationships with banks become more about their phone and apps rather than a branch or a teller.
  2. Process matters. Nearly 4 in 10 consumers who left their bank cited poor service or poor communication, primarily around fees. Amazon can receive, process and deliver an order on the same day. PayPal smoothly, safely and successfully processes millions of merchant and P2P payments every day. And all of this is done with no confusing prices or hidden costs—an issue that plagues banks.

If the trust is there and the execution is there, then non-traditional providers pose a significant threat to traditional retail banks. Amazon, PayPal, Google and Apple provide a soft landing spot for customers who are disappointed in their bank. Even more concerning for banks, technology market research reveals younger people develop a deep connection with companies like Amazon, Apple and Google before the need to “bank” is even on their radars, making them a more likely starting point for a banking relationship.

The funcitonality and consumer connection that tech companies have is and will continue to disrupt financial services, and a significant element of this is trust. This is an area Market Strategies has been spending a lot of time on with clients. You can read more about this in two recent blog posts: Trust Will Sustain Momentum in the Financial Sector and The Irony Behind the Perception of Value.

If banks hope to maintain their retail market share, they need to be smart about their brand and product development market research to ensure they are continually evolving online capabilities and developing a great mobile app to facilitate the fast, accurate and transparent processing that consumers are accustomed to in other areas of their lives.

Maybe the next big bank isn’t a bank.

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This entry was posted in Brand and Messaging, CX, Financial Services, Technology and tagged , , by Mike Berinato. Bookmark the permalink.
Mike Berinato

About Mike Berinato

Mike Berinato is a vice president in the Financial Services division at Market Strategies International and has more than 17 years of experience helping companies address critical business issues with market research and consulting. His expertise in qualitative and quantitative research enables him to address a breadth of different business challenges and provide clients with the highest level of strategic insight and guidance throughout the research process. Mike specializes in designing and executing research that uncovers and explains the rational and emotional drivers of behavior, including market analysis and segmentation, new product development, messaging and positioning and brand development. At Market Strategies, Mike works on consumer and B2B research with clients in the payments, banking and wealth industries. He holds a master's degree in political science with a concentration in survey research from the University of Connecticut and a bachelor’s degree in history from the University of Massachusetts, Amherst.

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