Amazon teams up with American Express for SMBs

Dhanum Nursigadoo
5min read

You can catch the full Fintech Insider take on the news today at 4pm on the podcast here.

Sticking to our Monday news blog format, we’re going to take a close look at one of the most interesting stories of the week’s show. For analysis straight from industry experts subscribe to our podcast!

Fintech Insider host and 11:FS co-founder Simon Taylor sits down with Freddy Kelly, Veronique Barbosa, Tanya Andreasyan, and Philip Clarke to discuss the news, including Amazon teaming up with American Express for SMBs.

Amazon Bank

Amazon makes yet another move that’s prompted fears about it becoming a bank; teaming up with American Express to provide a card aimed at delivering better financial products to small businesses. Small businesses have repeatedly appeared as a gap in the market with a great deal of discussion going on about how to serve them properly. It’s a strange scenario when small businesses have been so lucrative for banks for such a long time. SMBs spend hundreds of thousands with one account compared to the few thousand that an individual customer spends.
SMBs are run by people who know what good experiences can be but fail to get them as businesses - Philip Clarke.
Amazon have a track record of not caring about short-term gains. Often the company opts to make a loss or at least be unprofitable on a product line for a few years and wait for a greater payoff in the future. A good example of this is Amazon Web Services which ran at a loss for 5 years before becoming the majority of Amazon’s operating income. American Express managed to win the contract from competitor banks such as J.P. Morgan, in part thanks to their leadership role in the SMB space. Amex is currently the biggest card issuer in the USA for small businesses, according to themselves.

Underserved SMBs

SMBs are used to providing easy customer experiences for their own customers but rarely get to enjoy them themselves. Banking providers have long failed to deliver a user experience and there’s a real possibility that Amazon might be able to bridge that gap. Amazon has made a few waves in the SMB sector recently, they offer specialised business Prime memberships and they’ve been lending to SMBs for a while; around $3 billion so far. Amazon are well known for moving into a marketplace by analysing what’s going on in the space as a customer, before removing suppliers. There’s a possibility that could happen here. However, when Amazon Business first came to the UK it partnered with banks to great effect. It also partnered with Bank of Baroda in India and that relationship appears to be working well for both parties. It’s unlikely that Amazon will move into becoming a bank given how much they appear to value their partnerships with banks, and integrating their new system for SMBs is likely to be much easier using those relationships. Don’t forget to subscribe to the Fintech Insider podcast here and comment below with any insights you’ve got to share; join the Fintech Insider News community here.