Amazon is set to ramp up lending to small businesses in the UK, as well as the US and Japan. Directly challenging big banks who have traditionally dominated the finance scene, Amazon is set to expand its lending business and offer small business loans to more of the millions of businesses trading on its marketplace.
The lending business, dubbed Amazon Lending, was initially launched six years ago, offering sellers on its ecommerce marketplace instant small business loans for up to 12 months at annual interest rates ranging from 6 to 17%.
Although launched with little fanfare, Amazon Lending has already lent over $3bn in total, with $1bn in the past year alone.
Independent sellers can receive thousands of pounds direct from Amazon’s own balance sheet within 24 hours, with the ecommerce giant then deducting loan payments every two weeks automatically from the sellers account.
If the seller has any trouble paying back the loan, Amazon can freeze any merchandise until payment is received.
Amazon is just the latest business to challenge the bricks-and-mortar status quo of the finance industry. The rise of fintech has led to a boom in never-before-seen rivals to big banks like HSBC and Barclays, with a fintech fear slowly developing within the walls of the traditional players.
So much so that a recent PwC report found that 61% of UK financial services industry leaders believe they could lose as much as 40% of their revenue to standalone FinTech firms. Looking globally, this number rose to 51%.
This fintech fear has led to a ‘can’t beat them, join them’ mentality among the big industry players, with huge investment being pumped into areas like blockchain and AI. Barclays, for example, recently open Europe’s largest fintech accelerator in London, while JP Morgan pumped $600m into fintech as part of its $9.5bn tech investments in 2016.