Here is another reason banks should fear the likes of Amazon.com Inc: A survey showed that consumers are eager to see technology titans take on finance.
Nearly 60 percent of US bank customers are willing to try a financial product from tech firms they already use, a survey conducted by consultant Bain & Co found.
For younger respondents, the interest was especially high. About 73 percent of people aged 18 to 34 said they would try a tech firm’s credit card, deposit account, investment or mortgage.
“They’re saying if you come up with an experience as simple and easy as my shopping experience is with Amazon, I’m ready to do that now,” Bain partner and report coauthor Gerard du Toit said in an interview. “We’ve seen this happen already in China, where it’s common for people to do many of their banking activities through WeChat (微信) and Alipay (支付寶) and players like that.”
Bain’s study drew on a survey of 133,171 people in 22 nations, showing that attitudes vary widely.
More than 80 percent of respondents living in India and China said they are open to trying new financial offers from tech companies — more than double the acceptance rate in France, which ranked most reticent.
While tech juggernauts, including Amazon, Alphabet Inc’s Google and Facebook Inc, are already expanding in the US into areas such as payments or lending, they are not amassing deposits. That is because federal laws prevent companies from combining commercial ventures with fully fledged banks.
Instead, banks are to partner with Amazon and others, Du Toit said, adding that lenders would manufacture financial products and tech giants would serve as distribution and servicing channels. In other words, what Amazon already does with consumer goods.
However, because distribution accounts for two-thirds of banking profits, according to a McKinsey & Co report, banks might not love being relegated to mere factories for mortgages and credit cards.
Because Amazon would not have to pay to lure customers — it already has millions of them — it could afford to set up digital accounts without “all the nuisance fees and relatively high minimum balances” that lenders impose, Du Toit said.
That would appeal to young consumers, who are most likely to try new things, he said.
“It’s just a matter of time before we see the big tech players enter retail banking in the US,” Du Toit said. “You’re going to see a Darwinian battle between banks and tech firms, and some surprising combinations on how they get to market.”
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