BloombergTechnology took on the topic that many have been asking: When does Amazon do to the banking sector what it has done to retail? This question has been brought up even more frequently of late in light of the comments made by the acting Comptroller of the Currency, Keith A. Noreika, suggesting that the rules that keep retailers like Amazon from providing full banking services need to be reviewed for potential revision:
Tech juggernauts including Amazon, Alphabet Inc.’s Google and Facebook Inc. already are encroaching into turf long dominated by banks, such as facilitating payments or offering loans to small businesses. And they could expand in areas such as consumer credit, trying their hand at the types of personal loans provided by fintech ventures like SoFi and LendingClub.
Although non-chartered, non-financial institutions are getting in deep with payments and lending and financial advice, it is unlikely that full banking capabilities will be allowed without regulatory oversite by the OCC and without some changes made by Congress, something which is far from the current focus for lawmakers:
Still, erasing the divide between deposit-taking banks and commerce would probably require consensus among several U.S. regulators, as well as congressional action, which isn’t likely anytime soon. Even then, tech firms and online retailers might not want to go through the trouble to become full-fledged banks.
The article also puts some thought around what are the most likely areas Amazon and other non-banks would consider jumping into with or without a formal banking charter including more on the payments front, deposit gathering, small business lending, and corporate loans, all which support their core businesses.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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