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Amazon Bank Accounts? Why Commercial Banks Should Fear the Online Giant

Analysts have been predicting for years that Amazon would get into banking. In March, the Wall Street Journal reported that the online retail giant was even in talks with J.P. Morgan to offer checking accounts. Now it appears that banks have a real reason to fear if that ever comes to pass.

A Bain & Company survey of 6,000 people published Tuesday showed that consumers trust Amazon (AMZN) more than they do their banks: 65% of Amazon Prime customers said they would sign up for a bank account with Amazon (specifically, a free account that offered 2% cash back), while 43% of non-Prime customers and 37% of non-Amazon customers said they would.

Of course, to move into banking Amazon would have to overcome hurdles that have slowed other retailers in the past. It would have to clear regulatory obstacles, perhaps by buying a smaller bank and scaling it up. That’s because laws have long separated banking from other commercial sectors for reasons ranging from limiting systemic risks and conflicts of interest to lobbying from existing market players. For example, Walmart (WMT) made an ill-fated stab at the banking sector in 2005, until some unlikely bedfellows in the financial industry fended it off. (Last year in Fortune, NYU economist Lawrence J. White argued that it was time to let Walmart and other commercial giants into the banking industry.)

Still, Amazon already makes possible many of the smaller tasks associated with banking, from paying back friends to storing cash, through unlicensed transactions, such as Amazon Gift Cards or the Amazon Cash service. If you’re a small business owner, you can take out a loan from Amazon, which has already loaned over $3 billion to entrepreneurs. And more such services may be on the way. “What’s more likely is technology getting to a place where things that we think of banking today can be done outside of banks,” Aaron Klein, policy director of the Center on Regulations and Markets at the Brookings Institute told Bankrate earlier this year.

In the end, Amazon’s close relationship with its customers may be more dangerous to banks than its size. In a briefing earlier this year, Bain warned that, “[p]erhaps the greatest challenge to senior bank executives and board members is to recognize that Amazon has a completely different worldview focused on lifetime customer value, while most banks remain slaves to in-period ‘bad’ profits.”