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Apple CEO, Tim Cook, recently announced the company’s first foray into the banking world via a partnership with MasterCard and Goldman Sachs. But they aren’t the only game in town. New (and old) players are emerging and money remains a strange beast when it comes to how people act and behave. Is the finance world about to be shaken up? Quite possibly.
The offer of Apple Card is simple – a digital money app and a physical credit card (the first Goldman Sachs has ever issued) with a digital-first focus. Why is Apple doing this? For financial gain of course but it’s also something that’s very important for their future. Apple will get a fee from Goldman Sachs for every card issued but beyond this, Apple gets consumer loyalty. Apple wants to offer a pro-consumer way to manage your finances better. Sounding disruptive? Unlikely but the numbers Apple commands (marketing budgets and users) make it possible. People (and businesses) remain nervous about switching to new banks (even when backed by the big financial companies). This is what makes Apple’s move so interesting as data shows people are willing to switch to known brands. Five years ago, almost a third of those surveyed by BBVA would bank with Apple if they offered such a service. Today that number could be double (or higher) considering Apple’s rhetoric on privacy, no significant scandals and ‘the user’. The reverse could also be true, people might say one thing but do another – there’s a powerful psychological aspect when it comes to a person and their money. Apple is a market force on the best of days, but entering banking this soon was unexpected. Despite a positive press launch (the card hits phones and doormats later this year), Apple Card appears to be the best of a lot of what is already out there. Nothing is wrong with this but innovative isn’t the correct term to apply to it. With +1.3 billion Apple users, transformative may be a better term because of Apple’s brand. Apple Card offers few unique options choosing instead to cherry-pick features from the existing landscape (cash back, savings pots). Apple has curated the best of them and, in turn, will force competitors to up their game. Apple is also making finance more ‘fun’ for everyone, and that’s key to its success with younger demographics. The Apple Card will likely be a good move for user privacy (thanks to encryption and Apple’s stance on the matter) but by no means rewrites the rules of finance. Bar China and Norway, most countries are hovering around the 20% mark when it comes to paying with services like Apple Pay. A massive opportunity for Apple to not just grow in this area but also to avoid churn and lock people into Apple Card and its other services. Apple Card is a play for the future but Apple isn’t the only one looking at shaking up finance. Facebook has also announced ‘Project Libra‘ which despite the company’s many and severe privacy scandals along with low public trust, will be a cryptocurrency-based payments system based on Wall Street Journal reports. Project Libra will be a stablecoin (a cryptocurrency designed to be less volatile) backed by government currency and is a big move for the social network that has +2.5 billion users. Facebook has been having talks with Visa and Mastercard about supporting the product. While Project Libra is still ‘tightly’ under wraps, Apple Card will be available this summer in the US and will roll out to other territories after this. The big play for both offerings is with businesses. Facebook could eliminate credit card fees for merchants, and Apple could help people spend and save smarter – a sword that could cut both ways. The loyalty element is also interesting for both companies as new models could surface that could up-end the current table for marketers and brands alike. Start thinking now about how your business and your customers will use these offerings and how you can benefit best from them.
Paul Armstrong runs HERE/FORTH, an emerging technology advisory, is the author of ‘Disruptive Technologies’ and regularly writes about technology and society for Forbes, Reuters and Cool Hunting. He is also the creator of TBD the conference which attendees described as ‘TED… without the bullsh!t’. www.thetbdconference.com