Thursday, March 29, 2018

Amazon may launch a bank account aimed at teens, says report

Amazon has been in discussions with banks to create a product aimed at teens and other younger users who don’t have their own credit cards, or an interest in applying for one, according to a new report from Bloomberg. The company reportedly has held early stage talks with banks including JP Morgan Chase and Capital One, with the goal of creating some sort of checking account-type service that would make it easier for Gen Z customers to shop Amazon’s site.

This is not the first time Amazon has been said to be talking to banks about establishing some sort of banking product of its own.

Earlier this month, The WSJ reported Amazon was talking to big banks, including JPMorgan Chase, about building a checking account product. Bloomberg essentially confirms this earlier reporting, with the additional emphasis on the product’s youth appeal, and why it matters.

Most notably, it has to do with the younger generation’s approach to credit – or rather, how they’re not all that interested in obtaining a credit card. In fact, those ages 18 to 24 prefer using debit to credit, noted Bloomberg.

In addition, many young users don’t qualify for credit, and younger teenagers couldn’t even apply. Teens under 18 also can’t set up their own bank accounts, without parents’ consent.

Amazon had previously addressed the teen market with its Amazon Cash cards that let anyone add cash to an Amazon account by purchasing a card at a local retailer and giving the cashier the amount they want loaded into their Amazon account.

The company also last year launched a way for teens to shop the site independently of their parents – creating their own lists, and making purchases via parents’ accounts, while abiding by pre-set spending limits parents set or by getting purchases approved after parents’ review the requests.

But more recently, a number of alternative banking products have arrived for teenaged users, like Current, which ties into a chore-and-allowance system parents set up in an app, and Greenlight, whose “kids” debit card works both inside and outside the U.S. There’s also a host of millennial-flavored investing products on the market that help younger users learn to save, tuck away their digital loose change by rounding up purchases, or teach users how to invest.

Amazon may see the potential then, in going a similar route. Meanwhile, the banks may be interested in working with the retailer, given their need to find new ways to appeal to millennial shoppers wary of signing up for credit cards.

Bloomberg noted Amazon’s banking product could also entice users by reducing or eliminating traditional fees, or by taking advantage of Alexa in some fashion.

We’ve asked Amazon if it’s commenting on the report, and will update if the company has more to share.