Amazon has made a move on the wealth management space by investing in the Indian fintech startup, Smallcase.
The event looks set to leave other contenders sweating with comprehension, as when Apple entered the BNPL sector.
Amazon invested an undisclosed sum in Smallcase as part of the Series C round’s US$40mn scoop which was led by Faering Capital.
Speaking about the recent move to Money Marketing, a spokesperson for Amazon said, “In April this year, we launched a $250mn Amazon SMBhav Venture Fund (ASVF) to invest in early-stage tech start-ups. As part of this Fund, we are excited to partner with Smallcase in their journey to offer innovative consumer investment products.”
They added, “By increasing product selection and convenience, this will provide an additional channel for consumers to participate in the equity markets.”
Amazon investment in India
This is not the first time Amazon has shown fiscal interest in India's commercial resources. In early 2020, CEO Jeff Bezos visited the country and announced Amazon would invest $1bn in India's retail market, to help digitise the country's SMEs. Prior to that, the online retail giant committed to invest over $6.5bn in India over the next five years.
Amazon wealth management entry
The new market entrant has been recognised as a formidable move within the sector, Ian McKenna, director of Financial Technology Research Centre, described the deal as a “wakeup call” to the wealth management industry.
Until recently Amazon has had minimal insurance and fintech interests. But the corporation explored the financial services sector in 2020, when it announced plans offer car and motorbike insurance in India.
The move was part of an agreement with Acko General Insurance - an Indian insurance company.
McKenna believes the wealth management industry should be wary of Amazon’s new entry into the marketplace. “Its reach with consumers and understanding of behaviour are both spectacular and frightening,” he said.
“This move may look tentative and remote but it’s the direction of travel that people need to recognise.
“It would be an incredibly brave person who bet against it developing the capability to understand exactly what would make different types of investment products attractive to various consumers.
“Imagine its ability to say people like you liked this type of ISA, pension, Insurance, etc.
“If this isn’t a wake-up call to the industry nothing is.”