There used to be four main Banks. Then we had a Fintech revolution, and suddenly we are inundated with choice: Monzo, Revolut, N26 (exited UK in April) Starling and now P2P player Zopa has joined the fray.
Yet only today Monzo had raised doubts on its survival saying disruption resulting from COVID has led to “significant doubt” about its ability to continue “as a going concern.”
The trouble with the Fintech Bank is it currently has little to offer – sure it’s captured around 5% of the market, but it is little more than a place to deposit your money, use a ‘sexy’ app, and carry a funky plastic/metal card.
The incumbents currently lose up to £15 per customer, per year and their ‘youth’ market is fickle, often jumping to the next trendy offering on a whim. With a raft of second wave competitors launching across Europe, Fintech Banking is starting to look like a very, very expensive, long term investment proposition, unless one of them can really start offering something unique.
Except there’s one player, yet to come to market, that will turn the whole concept of banking into a completely new offering without ever being a bank – and 90% of us in the UK, are already their customer.
As market intelligence platform CB Insights points out “From payments, to lending, to insurance, to checking accounts, Amazon is attacking financial services from every angle without applying to be a conventional bank”.
Both product development and investment at Amazon seems to show it isn’t actually building a traditional bank that serves everyone. Instead, Amazon has taken the key components of a modern banking experience and tweaked them to suit Amazon customers (both merchants and consumers).
Amazon is building a bank for itself, and that may be an even more compelling development than launching a Fintech deposit-holding Bank that the Fintech Banking crowd are fighting over.
Traditional banking is about to go through a major change if Amazon and COVID have anything to do with it. With a £1.5 trillion valuation and access to almost unlimited funds, it’s hard to see how Fintech Banks will compete with Amazon.