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Speculation continues over whether or not Amazon will venture into the mortgage industry.
KEY TAKEAWAYS
- Currently, lenders find it daunting when trying to develop technologies that deliver great customer service and usability.
- Tech firms, on the other hand, have the knowledge and capability to create a user experience that appeals to the largest demographic of homebuyers: millennials.
- Amazon could take the same path as Quicken Loans by partnering tech company Inuit with Rock Financial. Or they can become a direct lender, like Zillow, by purchasing an existing lender.
- One of the main barriers to pursuing this business venture is the lack of trust among millennial consumers. The primary concern amongst survey respondents was the lack of privacy and potential for data breach.
Speculation continues over whether or not Amazon will venture into the mortgage industry. Rumors have been circulating for the past few years, but as more time passes, the question becomes when rather than if. The idea doesn’t seem so far-fetched, especially after the Amazon founder and CEO, Jefferey Bezos, launched his most recent business venture, offering 10-minute commercial space rides at $200,000 per ticket.
The capability that Amazon has with its massive wealth and technological abilities spurs the imagination when it comes to revolutionizing the mortgage industry. Currently, lenders find it daunting when trying to develop technologies that deliver great customer service and usability. Tech firms, on the other hand, have the knowledge and capability to create a user experience that appeals to the largest demographic of homebuyers: millennials.
Amazon’s current financial partnerships present many opportunities for further projects. They could take the same path as Quicken Loans by partnering tech company Inuit with Rock Financial. Or they can become a direct lender, like Zillow, by purchasing an existing lender. Another option is they can choose a membership-only model like Amazon Prime, using mortgages as an incentive to join. Lastly, there is the mortgage broker franchise route, which puts the burden of licensing and regulatory issues on the shoulders of the franchise, like Remax Holdings Motto Mortgage.
However, one of the main barriers to pursuing this business venture is the lack of trust among millennial consumers. According to a survey by Fannie Mae, 16% of consumers trust their favorite financial technology company to handle their mortgage needs. Yet, this trust fails with bigger tech companies like Amazon, with two-thirds stating they would not trust a large technology firm. The primary concern amongst survey respondents was the lack of privacy and potential for data breach. This might explain Google’s two failed attempts to launch Google Advisor Mortgage.
Most recently, Lakeside Title Company reported that Amazon is looking for banks interested in partnering for an Amazon-branded checking account while offering credit cards from Chase and Synchrony Financial, and American Express. This should allow them to build more experience working in the finance industry.
