Aside from frivolous tweets from a certain someone, you would be hard-pressed to find negative ink about Amazon these days. Much of this has to do with the company’s unimaginable growth, though it certainly hasn’t hurt that Jeff Bezos is developing an image that is part Cornelius Vanderbilt, part Keyser Söze, and part Steve Jobs. In any case, there’s an obvious level of exuberance for Amazon’s equity shares and competition for its second headquarters.
The lore of the company and the mystique of its CEO notwithstanding, Amazon is having a monumental impact on the investment management industry in two ways:
1. Cloud computing
Firms such as Spotify, Netflix, and AirBnB utilize Amazon Web Services (AWS) to host their websites. Closer to home, the same can be said for behemoths like Capital One and BNY Mellon. Evidently, scalability is no issue even for those firms with a global reach.
Still, something truly special about AWS is how it’s made cloud computing available to fintech startups. Instead of eroding precious startup capital on servers and an army of developers, startups can instead leverage Amazon’s infrastructure. Anne Boden, CEO of Starling Bank, estimates that large scale operations previously costing $30 million can now be done for $30,000. If that isn’t remarkable enough, AWS also offers machine learning capabilities, security features, and data storage tools, which can reduce expenditures even further.
Thanks to Amazon AWS, barriers to entry have been diminished and exotic computing capabilities are growing more ubiquitous. The number of startups emerging out of Silicon Valley will continue to proliferate as a result, reshaping every facet of financial services.
2. User Experience
Upon Amazon’s purchase of Whole Foods, the joke went that when purchasing a steak at the upscale grocer, a physical pop-up would soon emerge saying, “Customers who bought this item also bought:” and have an image of lobster tails. Ridiculous as this may be, Amazon, along with the likes of Netflix and Spotify, have changed the way users expect to access information.
Investment managers are catching on.
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With three of the top five largest asset managers using Harvest Exchange, our platform is validation that user experience matters. Inherent in this is the role of artificial intelligence, which allows us to customize each interaction based upon the user’s demonstrated interests. This kind of personalization and symmetry is an important step forward in modernizing how investment managers communicate with their clients.
In the end, Amazon is having a profound impact on the investment management industry without managing anyone’s money. They have drastically reduced barriers to entry for fintech startups, while also creating winners and losers based upon the accessibility and transparency of a firm’s online experience.