Imagine a bank like Amazon that gives you access to all financial products via an integrated marketplace without new registration.
Open marketplace was a game changer for Amazon
Amazon is now the undisputed leader in online retail. For many customers, Amazon is the go-to destination if you want to buy anything on the internet. Amazon has continuously expanded its product range, and today, it offers virtually everything.
In addition to its own product range, Amazon opened its marketplace to third-party suppliers as early as 2001. This has strengthened Amazon’s position in the long term because Amazon has truly become the “everything store.” There is (almost) nothing that is not available on Amazon. Today, the marketplace accounts for 58% of revenues.
Imagine an open marketplace for financial products
Imagine a financial service platform like Amazon. A single marketplace where you can get all banking and insurance products from different providers. You can easily compare and choose between the best offers. Customer reviews help you pick the best products for you, but the platform is much more than just a comparison platform.
More than a comparison platform
After a one-time registration, you can purchase any financial product easily without re-verification. You also have to answer other questions only once, e.g., due to MiFID.
In addition, you always have an overview of all your financial products on the platform and receive market information free of charge.
A financial platform like Amazon might also offer a service like Amazon Prime as a way to reward loyal customers and provide them with additional benefits and incentives to use the bank’s products and services. For example, they could offer free or discounted services such as waived fees, higher interest rates on deposits, or cashback on certain purchases. Additionally, a service like Amazon Prime could be used to provide exclusive access to financial products like special loan and savings rates, credit card rewards, or investment opportunities. It could also include exclusive access to events and experiences, such as financial seminars, networking events, and other perks.
An AmazonBank could further leverage its large customer base and apply a data-driven approach to increase customer retention by understanding their needs and offer them tailored solutions. The access to data allows it to offer tailored financial products and services to customers such as customized loans, savings plans, and investment options. It could also be using AI to provide personalized financial advice and fraud detection.
Massive convenience improvement
Imagine I bought my household insurance via an Amazon platform for financial products. For this, I would have to register and verify once, just like with every new financial product. If I later need travel health insurance, for example, I can compare and buy this very easily. I can easily compare the offer of my current insurance provider with the market. By the way, this is not necessarily a disadvantage for the current provider of my household insurance who may be able to score with a bundle-discount compared to other providers. For me, buying travel insurance is super easy without having to register again, whether I buy it with my current insurer or a new provider.
Is the time ready for a money supermarket?
Most banks already have open platforms for investment funds. I can still remember the discussion that went on for years until the banks were ready to open their platform to third-party investment products. Today, open platforms for investment funds are the market standard. Banks have ultimately benefited from it.
Some might remember the concept of a Money Supermarket. Perhaps the time is now ready for it. Opening up banking or insurance platforms to third-party products would be a game changer for the whole industry. If a bank or insurance were to boldly go ahead today, it would have the chance to dominate the market like Amazon dominates online retail.
Comparison portals in pole position to launch AmazonBank
An integrated open platform like Amazon would be highly attractive for both suppliers and customers. So, why does AmazonBank not yet exist?
Established banks and insurance companies are still reluctant to open up their platforms despite their positive experience with investment funds. The main reason is that they fear price transparency and customer churn. Although, the incumbents would benefit greatly from such a model. In particular, the first mover would have the chance to completely roll up the market.
Today, comparison portals like Check24 would be best positioned to grow their business model into an integrated marketplace like Amazon. Up to now, customers can only compare there, but they must register again each time they buy a new product.
Today, comparison platforms already have such market power that product providers cannot avoid working with them. This would be a big challenge for new providers who want to build an integrated open marketplace. In addition, technical integration is a challenge; banks and insurance companies still do not want to enable easy integration via API.