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A missing 'fifth element'

Two days after the original article on "Amazon vs PayPal" was published and tweeted by several people, one of the Amazon Payments' top execs joined Finextra. Talk about coincidence... These days, PR teams keep an eye on online "exposure" of their companies/clients. United Airlines paid a hefty price for ignoring the power of social media - "United Breaks Guitars" is a must-know story (it is rumoured to have cost the company US$180m at some point). 

Coming back to the original subject, here's another good view of the battle between Amazon Payments and PayPal - from the perspective of "centralized" vs "distributed" approach.

It would be safe to say that Amazon offers the best e-commerce experience in the world, especially when it comes to checkout process. In April this year, Amazon extended its (patented) "1-click" platform to in-app purchases (taking a 30% cut, btw). Guess what - one month later PayPal offered the same functionality.

Both companies are good at catching up, but can either of them become a true innovator? Keith Rabois, the former PayPal exec, offered the following harsh take on his old employer: “It’s sad that what qualifies as innovation there now is trying to replicate, piece by piece, something that someone else is doing.”

Both companies have some unique strengths: PayPal is great at fraud management (but there are several hot start-ups that offer superior SaaS anti-fraud solutions, available to any third party); PayPal expanded to physical retail (which still represents around 90% of total sales); Amazon has solid  experience with creating a device (Kindle) which consumers love; Amazon is good with "cloud" (AWS grows at 70% p.a.)

Can any of those strengths be combined with some "fifth element" to deliver the solution that will leave the competitor in the dust?

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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