Amazon's Next Project: Checking Accounts

As Amazon dives deeper into each of our lives, its next big move is to create a product that would appeal to the younger demographic who are often lower income and do not hold bank accounts. The idea is in its early stages, with Amazon in talks with large banks such as JPMorgan Chase & Co to create the product.

Amazon is attempting to play into the hands of the 15.6 million people in the US that are unbanked (meaning they have no checking account, savings account, or credit cards of any kind). A product similar to a checking account would greatly benefit both sides, as the consumer would now be able to shop on Amazon, and the company would reduce fees it pays to banks. Customers may also become more loyal to Amazon due to the ease and efficiency of the product.

As Justin Post, Bank of America analyst, said,

We think [Amazon's] aim with expanding its financial offering is less about disrupting the financial sector and more about increasing engagement on its own marketplace (Business Insider)

The product would be in direct competition with Walmart's low-fee checking accounts and in-store money services that are geared toward low-income customers. Walmart attracts those customers by offering services such as low-fee check cashing and bill pay. With Amazon's interest in services geared towards those of lower income, we can see how big of an effect that the younger generation and working class Americans has on these companies.

Like Prime, Amazon may want to offer checking incentives to drive customer lock in and higher long-term retail sales (Justin Post, Bank of America Analyst)

 However, analysts believe that the checking account service would not have a huge impact on Amazon's bottom line.