Recently Paytm went banking with two insurance companies and a banking service within its primary payments app and now Amazon has filed for permissions to trade in the sector. If things go as planned, the e-commerce firm will soon become a loan provider. Despite the troubles of loans, India’s financial sector has always seen a lot of pull.
With Paytm already in the competition and Flipkart also asking for permission to sell insurances, it would be great to see these e-commerce giants battle out in the financial sector as well.
Amazon Finance via Amazon Pay
According to reports, the new digital payments brand from Amazon called Amazon Pay will sell financial products such as loans and EMI offers, provided Amazon is able to secure the nod from the Ministry of Corporate Affairs.
For now, Amazon Pay is a payments service app just like Paytm where you can add money in the digital wallet and use the same for Amazon orders as well as other online orders on other websites. However, the banking service is still not applicable and the account you create with Amazon Pay simply debits money from your own bank accounts that are linked to it. But going forward it will have to offer a proper banking service if it has to get into loans and insurance.
Competition
Apart from the competition from other e-commerce giants spreading their wings into the financial sector like Paytm and Flipkart, Amazon Pay will also see stiff competition from existing players like LIC, Bajaj Allianz and ICICI
The Future
While Paytm got the go-ahead last year, it has already formed the Paytm General Insurance Corporation and Paytm Life Insurance Corporation. Even Flipkart is ahead of Amazon in this race as they have already reached out to the Insurance Regulatory and Developmental Authority of India, while Amazon is yet to do so.
But as per experts, the scope of growth in this sector for payment brands providing banking and insurance services is very high because of the likeliness of customers buying a financial product from the same brand increases.
Also with a more aware generation, Insurance segment is likely to see a substantial growth in the coming years.
