Long reads

What Amazon CEO Jeff Bezos stepping down means for fintech

Madhvi Mavadiya

Madhvi Mavadiya

Head of Content , Finextra

Jeff Bezos will step down as founder and CEO of Amazon and transition to chairman in 2021, allowing seasoned cloud executive Andy Jassy to take the reins of the $1.6 trillion giant. As detailed in an email to his employees, Bezos will focus his “energies and attention on new products and early initiatives,” suggesting that the world’s richest man will retain his heavy hand in the company’s direction.

While the rumour mill had Jeff Wilke, CEO of Amazon’s worldwide consumer business, pipped for the post, following the news of Wilke’s retirement in August 2020, Jassy was thought to be the logical successor. Jassy joined Amazon in 1997 and has led Amazon Web Services (AWS) since its inception, driving much of Amazon’s profit.

As of October 2020, 52% of Amazon’s operating income was attributed to AWS. The earnings report also revealed that Amazon posted its first $100 billion quarter, with Jassy leading AWS to 28% revenue growth for Q4. “Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.

“This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, ‘What’s the internet?’ Blessedly, I haven’t had to explain that in a long while.

“Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.

“How did that happen? Invention. Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive,” Bezos said.

But what does Bezos stepping down and Jassy taking over mean for the financial services industry and fintech? Firstly, the importance of cloud computing in the sector is highlighted yet again alongside the fact that cloud markets are growing exponentially.

In addition to AWS’s history-making quarter results that quoted a $51 billion run rate with a growth of 28% YOY, Microsoft Azure has an estimated $29 billion run rate with a growth of 48% YOY and Google Cloud states a $15 billion run rate and growth of 47% YOY. It is evident that so much more innovation is yet to come, and the finance and fintech industries will be able to leverage and profit from it.

It is also worth noting that Satya Nadella was executive vice president of Microsoft’s Cloud and Enterprise team before taking on the role of CEO, indicating that cloud strategy skills will be an inherent part of business leadership in the future. But what will Andy Jassy bring to the table?

At re:Invent 2020, Jassy took to the stage to explain that there is “still a lot of growth ahead, with just 4% of total IT spending currently on the cloud. COVID-19 is pushing companies to the cloud. There’s less dipping of toes into the water and more action. Companies on the Fortune 500 don’t often last there, unless they reinvent themselves regularly. Better to do this early when you are healthy than in a moment of desperation. To do this you need the right culture and the right technology.”

Reinvention is key for all financial companies, and as those operating in the fintech industry will know, a common theme when considering recovery from global events that result in economic downturn. Alongside this, a need for the “right culture” and use of the “right technology” is at the very core of success and progression in fintech.

Using Stripe as an example and mentioning the fintech giant in the same breath as Airbnb and Peleton, Jassy indicated that it takes leadership to invent and reinvent, reiterating that technology skilled individuals need to be in leadership roles.

“You have to be maniacal, relentless, and tenacious. You need to have the data, even if people inside might try to obfuscate it from you. You can’t fight gravity, and you have to have the courage to pick up and change. Netflix cannibalizing DVD rental business, or Amazon.”

Lori Beer, CIO of JPMorgan Chase, had a similar view at the event, stating: “Everything is at tremendous scale. Technology helps them to differentiate, dealing with technical change since the time of Thomas Edison. Today, driven by mobile computing. Rapid pace of change, disruption.”

Further, homing in on the use of artificial intelligence (AI) and machine learning (ML), Beer spoke about how AWS is being used to “refactor apps to be cloud native […] while staying secure.” While banks have continuously been working with cloud providers like AWS to digitise their process, products and services, particular technologies have been leveraged at an accelerated pace amid the coronavirus.

According to EY, there has been a 72% rise in the use of fintech apps in Europe during the pandemic and therefore the speed of change is key. “The ability to spot and quickly smooth over any bumps will be key to making the experience better for customers and avoid reputational damage,” EY explores.

Further to this, open banking APIs powered by advanced analytics and advanced AI in the cloud can provide richer real time personalisation that many fintech and financial players are taking advantage of.

“EY´s 2020 Global Corporate Divestment study shows divestment activity is poised for a strong return with 60% of banks intending to divest within the next 12 months. Many banks will look to use the funds raised to accelerate their adoption of digital technologies, such as analytics, artificial intelligence, robo-advisors and blockchain.”

Amazon is ahead of the curve, as Beer explained at re:Invent 2020. Holding “hackathons in conjunction with AWS to better understand problems, then develop reusable blueprints” allows AWS customers to “scale to massive volume” and “let them innovate and stay ahead of their competitors.” Beer is already “seeing payoff in efficiency, agility and security.”

Jassy added later in the session: “Make no mistake, we are very early in the history of machine learning,” and continued to say: “We want to have the right tools for expert ML practitioners, starting with tools and chips. […] We also need to support everyday developers and data scientists.” It remains to be seen what more AWS and Amazon will do with AI and ML in the financial space with Jassy at the helm.

Jassy is also renowned as being ‘crypto-curious’ and in a 2018 interview, opened up about its AWS’s earlier apprehension about need for blockchain technology following the launch of Amazon Quantum Ledger Database (QLDB) and Amazon Managed Blockchain.

“When we heard people say ‘blockchain’, we felt like there was this weird convoluted and conflating of what they wanted, and as we spent time working with customers, figuring out the jobs they were really trying to solve, this is what we think people are really trying to do with blockchain,” Jassy said.

While Jassy’s leadership of AWS has already led to innovative use of technology across the financial and fintech space, chairman Bezos may also have some unfulfilled plans up his sleeve. Of note, at the end of 2020, he invested in cross-border P2P payment service Chipper Cash, the first investment in an African startup for Bezos’ fund, which has also backed including Uber, Twitter and Airbnb in the past.

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