Apple's push into financial services is impressive, curious and maybe concerning.
Last night Apple revealed its bold foray into the world of financial services with Apple Card.
A titanium laser-cut credit card, 2% cash back, paid daily on all purchases, applications straight on your iPhone, categorisation of spending, payments tagged by retailer and location, and tight integration with Apple Pay and Apple Wallet.
However, if you’ve been living in Europe these past few years, few of these features will seem new or novel.
But clearly, the long-awaited arrival of Apple in financial services is worth paying attention to.
Google, Apple, Facebook and Amazon (GAFA) have all reportedly been biding their time before bursting into the sector, and now Apple, with its vast stockpile of cash and deeply entrenched customer loyalty, has made the first move.
So what does the news of Apple’s entry mean for incumbent banks and fintech challengers in Europe?
Megan Caywood, Barclays global head of digital strategy and cofounder and former chief platform officer of Starling Bank, tweeted immediately following the announcement:
Love seeing @Apple nail the challenger bank playbook:— Megan (@MeganCaywood) March 25, 2019
Apple Card includes easy sign up, no fees, works worldwide in Wallet app, 2% daily cash back, in-app chat for customer support, enhanced transactions with maps & merchant logos, plus cards laser etched in Titanium #AppleEvent pic.twitter.com/7rnEbQVoa3
Clearly what Apple unveiled is a testament to the innovative features pioneered by European fintechs.
But, when asked what the news might mean for credit card-based fintechs like Tandem, she added:
It is a good question. I think the challenge has always been, “will the innovators get scale before the incumbents get innovation” but everyone has been terrified of the GAFAs entering this space because they straddle being both incumbent and innovator since they’re tech— Megan (@MeganCaywood) March 25, 2019
For now, Apple Card will be US-only when it launches, however, as partner Goldman Sachs has been growing its global ambitions with the launch of Marcus in the UK, undoubtedly the iPhone-maker has plans to grow its reach and launching a full bank at some stage isn't out of the question.
UPDATE 2019-03-26 - Goldman Sachs CEO Richard Gnodde told CNBC the bank is "absolutely" already "thinking of international opportunities for it".
David Brear, group CEO of 11:FS, the consultancy and digital venture builder which developed NatWest’s digital SME bank Mettle, suggested that it would be traditional banks who will suffer:
🚨🚨🚨 Apple launch #AppleCard— David M. Brear (@davidbrear) March 25, 2019
This isnt a drill banks. This is the moment you've worried about.
👉🏼 Great UX
👉🏼 Rewards encourgaging daily usage
👉🏼 Hardware / Software integration
👉🏼 Baller card
👉🏼 P2P integration
👉🏼 Debt management
Say bye to your customers.
In a comment this morning Brear added:
"While on the surface, this has all the hallmarks of a traditional white labelled card, where a big bank, in this case Goldman Sachs, deals with all the boring stuff like regulation and risk while the non-FS brand takes on marketing and distribution side, it is much more than this.”
“Apple have used their ability to control both the hardware and software in their handsets to do something very different moving forwards. They have the capability to compete in one swoop with not only credit card companies but challenger/incumbent banks, loyalty programmes and P2P payments companies, which in the US with the likes of Venmo, are a huge deal.”
Meanwhile Ramin Niroumand, CEO and founder of fintech builder Finleap, pointed out how Apple Card is the culmination of Apple’s multi-year strategy to move into financial services:
Expected, but still huge when you see it in real. Stunning how ruthless or should I say, laser-focused Apple acts. Creates customer pressure on banks to sign up for “Apple Pay”, which creates larger acceptance, and then this... https://t.co/kA9A1QrJit— Ramin Niroumand (@rnirou) March 26, 2019
And Revolut’s head of marketing Chad West responded with a very Revolut’ian retort:
Game on @Apple— Chad West 🏴 (@ChadWestTweets) March 25, 2019
For now many of the biggest names, the Tom Blomfields, Valentin Stalfs and Anne Bodens of the world remain silent on Apple's push into financial services.
How long their silence lasts, we'll have to wait and see.