Amazon has been moving into a number of different industries and markets for some time but they’ve now set their sights on insurance.
In 2016 Amazon launched ‘Amazon Protect’, covering accidental damage, breakdown and theft. This year has seen reports they’ve started recruiting insurance professionals, possibly with the intention of disrupting the wider insurance industry.
Amazon could succeed for a number of reasons. They’re well known and trusted. Compare this to an industry which the public still doesn’t trust – rightly or wrongly – particularly around transparency.
Capgemini’s World Insurance Report found that 30% of people globally would buy insurance from a large tech firm, such as Google or Amazon. For many, Amazon is the first place they go for buying almost anything, so it’s not surprising consumers would start looking to Amazon for insurance.
The biggest problems for current insurance providers are digital and tech. Because of outdated IT systems, insurance providers need to catch up. Amazon already has a strong digital platform, so they can easily start changing how insurance is seen and bought online.
Amazon set the standard for customer communication. They maintain contact throughout the purchase process, updating users at each stage. Buying insurance online is already commonplace. For many it won’t be a big leap to start adding insurance to their Amazon basket.
Amazon current accounts
The tech giant is also turning its gaze on banking. Amazon has revealed it’s been in talks with Capital One and JPMorgan Chase about producing its own current account.
Being a huge tech-based company gives Amazon an advantage when starting in new markets. With the current account Amazon can get a number of different benefits.
Firstly, it’s more data. Amazon thrives off data and current accounts will give them access to data on customer’s shopping habits. It’ll allow them to further develop their algorithms and suggest related products to users when they shop.
They can also reduce their fees to banks and payment processors for customer’s payments. By having your shopping and bank account connected, under the same provider, there’s no need for these costs. This saves Amazon money and it’ll make transactions seamless for customers.
Amazon has already built trust with customers. If they can provide a current account product that users find easy to use and reliable, then they can build that trust further. This will help with Amazon’s profits and any future disruptions they have their eye on.
Amazon has a major advantage in whatever market it chooses to disrupt because of its strong digital foundation. It already has a massive platform that it continually builds on, improving the online shopping experience.
But it also has great brand recognition and trust. For most of us, buying on Amazon is second nature. It’s our first thought when we decide we need to buy something quickly and easily. This will only help Amazon as it moves into insurance and banking.
Amazon’s move into insurance and banking could be seen as a bad thing. But it’s also a positive. Disruption in any industry forces those already there to up their game, giving customers a better online experience and increasing competition in the marketplace