Amazon.com, Inc. AMZN 0.31% has become a massive success over time by taking an aggressive approach to exploring and adopting cutting-edge technology. In recent months, Amazon has been investing heavily in fintech initiatives with a particular focus on the huge, high-growth Indian market.
Betting On Fintech
Back in February, Amazon was one of several investors that provided $16 million in funding to Greenlight Financial Technology. Greenlight is a Georgia-based firm developing a smart debit card designed specifically for children. The debit card allows parents to monitor and manage their children’s spending using a smartphone app.
In March, Amazon announced it was providing $30 million in additional funding to its digital payments subsidiary Amazon Pay. The latest funding comes after Amazon designated $40 million in funding for Amazon Pay’s India operation in late 2017. Amazon has said it would increase its investment in the digital payments subsidiary fivefold in the next several years.
In April, Indian online lender Capital Float announced it raised $22 million in new funding from Amazon as part of its $67-million Series C fundraising round. Capital Float has partnered with Amazon India to provide loans to e-commerce sellers. Capital Float said it issues more than 10,000 loans per month, has an outstanding loan portfolio of $170 million and has a default rate of about 2 percent. Roughly 70 percent of its loans are microloans of less than $7,600.
Late in May, Indian online insurance startup Acko announced that Amazon was the leading investor in the company’s $12-million fundraising round. Acko aims to bring a technology-centric approach to the insurance business and recently received in-principle regulatory clearance to launch its business in India. According to Inc42, only about 3 percent of the transactions in the $80-billion Indian insurance market take place online.
Amazon seems to be targeting India’s fintech market in particular for several reasons.
India’s economy is the sixth-largest in the world, but it is growing at a much higher rate than most other economies of a similar size.
Indian citizens have much less access to banks and financial services than U.S. citizens. As of 2015, there were 233 million Indians who didn’t have any kind of bank account, much less access to banking apps, online financial services or digital payment options.
Amazon appears to see India’s size, growth potential and addressable financial market as a golden opportunity for fintech investments. Just this week, it was reported the company will raise its total investment in India from $5 billion to $7 billion.
If this trend continues, investors can expect to see more fintech investments from Amazon in and the potential for major returns on those investments in years to come.