The news: Amazon has partnered with the fintech Slope to offer AI-underwritten financing to Amazon sellers and reduce friction in the lending process. Eligible US Amazon merchants will be able to apply for and access loans through their seller accounts. Slope is focused on large sellers, which require substantial financing amounts, in contrast to Amazon’s smaller sellers.

Zoom out: This is an extension of Amazon’s expansive embedded lending services for sellers. JPMorgan Chase and Synchrony Bank are the issuers of Amazon’s Prime Visa and Prime Store Card, respectively. Green Dot Bank issues its Amazon Flex debit card. Affirm supports buy now, pay later (BNPL), which is embedded in Amazon.com’s checkout flow. Amazon’s lending marketplace offers loans issued by WebBank via QuickBooks Capital and Celtic Bank via Pararafin.

Our take: Amazon started enabling third-party sellers in 2000. Its marketplace business has grown so much that we expect third-party sellers to account for 64.3% of US sales on the platform. Amazon’s adoption of Slope means the former will use its own data to quickly approve and underwrite loans for sellers, boosting sellers’ stickiness to the platform. With Slope’s interest in larger loans, it may also mean Amazon is trying to offer financing for larger sellers who would generally go directly to bankss.

Banks have troves of data they can use to underwrite their customers, but they may do it slowly. Amazon could position itself as the go-to platform for higher-volume sellers as well as a more sophisticated alternative to financial institutions—and compete aggressively based on accuracy of underwriting and the time between applications and loan funding. It is the wise move for banks to move into embedded lending for ecommerce rather than try to sell loans to these merchants directly.