Amazon's move into banking could make online shopping possible for everyone

Wednesday, Mar 07, 2018
Jeff Bezos, CEO of AmazonPhoto: Reuters

Amazon's potential move into online banking may be more about reaching new customers than disrupting the financial industry, according to one Wall Street firm.

The Wall Street Journal reported Monday that the e-commerce giant is in early talks with financial institutions to build a "checking-account-like" product for its customers.

Bank of America Merrill Lynch reiterated its buy rating on Amazon shares, saying a new banking offering will spur more e-commerce sales, particularly with younger shoppers and lower-income consumers who don't have traditional bank accounts.

"We think Amazon's aim with expanding its financial offering is less about disrupting the financials sector and more about increasing engagement on its own marketplace," analyst Justin Post wrote in a note to clients Monday.

"While there may be some ability for Amazon to reduce the fees it pays to banks and payment processors by creating a closed-loop prepaid debit card type of product, we think that Amazon's primary motivation would be to attract younger and underbanked customers that otherwise would find it difficult to shop online."

The company's stock closed up 0.9 per cent Tuesday.


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Post reaffirmed his $1,650 price target for Amazon shares, representing 8 per cent upside to Monday's close.

He said Amazon Prime's penetration of lower-income households making less than $50,000 per year rose to 56 per cent in December from 51 per cent in the second quarter of 2017.

"Like Prime, Amazon may want to offer checking incentives to drive customer lock in and higher long-term retail sales," the analyst wrote.

"If Amazon's new product does come to fruition, Amazon-owned Whole Foods Market could be a logical place to test bricks-and-mortar merchant acceptance."

Source : Reuters, AFP Inc opened a rainforest-like office space in Seattle that it hopes will spark new ideas for employees.

Company office towers and high-end eateries have taken the place of warehouses and parking lots in Seattle's South Lake Union district.

The Spheres complex, officially open to workers, is the pinnacle of a decade of development here.

The Spheres' three glass domes house some 40,000 plants of 400 species.

Amazon, famous for its demanding work culture, hopes the Spheres' lush environs will let employees reflect and have chance encounters, spawning new products or plans.

The space is more like a greenhouse than a typical office.

Instead of enclosed conference rooms or desks, there are walkways and unconventional meeting spaces with chairs.

Jeff Bezos, Amazon's billionaire founder, officially opened the project in a ceremony with Amazon executives, elected officials and members of the media - by voice command.

"Alexa, open the Spheres," Bezos said, as a circle in the Spheres' ceiling turned blue just like Amazon's speech-controlled devices, whose voice assistant is named Alexa.

"We wanted to create something really special, something iconic for our campus and for the city of Seattle," John Schoettler, Amazon's vice president of global real estate and facilities, said.

This article was first published on CNBC