Amazon has the potential to upend a booming investment business, and it’s keeping industry insiders up at night

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Amazon brings a few things to mind for most users. Today’s deals. Gift cards. But could that soon include investments?

Amazon has shaken up industry after industry from bookselling to cloud computing to groceries. It’s now reportedly in early talks with banks to launch a checking-account product. And that, as well as the threat of platform companies to big finance more generally, has some wondering whether the tech giant could go head-to-head with Wall Street.

What would happen if Amazon decided to launch a robo-adviser, for example? Robo-advisers, a blanket term used to describe automated financial advisers, have become a red-hot market.

It’s a question Cynthia Loh, a vice president at Charles Schwab, which manages more than $20 billion in assets through its robo-adviser Schwab Intelligent Advisory, has on her mind. She told Business Insider she saw Amazon as a bigger threat to existing robo-advisers than the big banks.

“A Google or Amazon robo would keep me up at night more than Morgan Stanley’s new robo,” Loh said.

Betterment, the largest independent robo-adviser, launched in 2010 and now has more than $13.5 billion in assets. Morgan Stanley and Wells Fargo have launched robo-advice platforms. And JPMorgan and Goldman Sachs are expected to launch their own robos shortly.

Business Insider Intelligence estimates that 10% of all global assets, or $8 trillion, will be managed by robos by 2020. That would be up from $200 billion in 2016.

But despite the proliferation of providers, robo-advisers by and large all do the same thing: build a portfolio out of exchange-traded funds. The key differentiator is the user experience and the ability to scale, according to David Goldstone of BackEnd Benchmarking, the analytics firm behind the robo-adviser tracker The Robo Report.

“I think an Amazon robo would be compelling,” he told Business Insider.

“I could see an Amazon product doing well among those people who have never invested before,” Goldstone added. “It doesn’t have the rich experience of capital markets that Schwab and Morgan Stanley has, but in a passive world a rich legacy in investing and capital markets is not so important.”

Customer acquisition, which is one of the most significant costs for robo-advisers, would be close to zero for Amazon. That’s because it could use its massive e-commerce platform, which is used by hundreds of millions of people, to push the product. It could be as simple as adding a word to the navigation bar on Amazon’s website.

In the US, a plurality of millennials list Amazon as an app they can’t live without, while 73% of millennials say they would be more excited about a new financial-services offering from Google, Amazon, Paypal, or Square than from their bank.

“Amazon and Google have the tech expertise, they have the distribution network, they have this kind of focus on sleek user interface, and people trust them,” Schwab’s Loh said.

But just because Amazon could launch a robo, it doesn’t mean it would want to. One industry insider told Business Insider the launch of a robo-adviser wouldn’t fit into Amazon’s strategy.

“Everything Amazon has done in financial services is connected to one thing: getting people to buy more stuff on Amazon,” the person said. “Checking accounts would get the money from people’s pockets to Amazon faster. Loans for merchants get more goods on the site. But it’s not clear how a robo product could get people to spend more on Amazon goods.”

Still, as JPMorgan Chase CEO Jamie Dimon recently noted, Amazon has surprised everyone before.

“Who thought Jeff Bezos would go into movies?” Dimon asked the audience at JPMorgan’s investor day. “And he just gives it away for free to Prime because Prime pays for itself and he’s just trying to make you a happy Prime customer.”

He added:

“That’s why when we do online investing, we’re going to be thinking about, ‘How are we going to add that to the product set in a simple way … that the customer wants, so that they’ll say ‘I love this’?”’ Remember, if you’re a great client, we can do it for free.”

Maybe Amazon could do the same.

SEE ALSO: 8 ‘Amazon-proof’ businesses that are defying the retail apocalypse

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