So, now Apple is a bank (finally?)

In 2013, Apple launched Apple Pay as both a digital wallet and a mobile payment service, and now Apple is a bank?

Up to now, even with iPhones NFC capabilities, biometric authentication and the very robust Apple ecosystem, Apple Pay wasn’t a amazing success. An extra feature in Apple’s ecosystem yes, not a revolution. And since then, I’ve been waiting for more news and more commitment to this service.

Why? Because Apple is a consumer company and that payment is the key to everything’s consumer.

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Payment is the glue that hold together all relations with consumers in every market. This is also where the most personal data are harvested.

Remember also that you single most important ID in Apple’s ecosystem is not your face, your fingerprint, or your mail. It’s your banking card: the first thing you need to enter to activate your iTunes / iCloud entry in Cupertino’s friendly embrace.

But also because of China.

In an economy where payments are essentially both mobile and digital, from luxury malls to street food vendors, being an actor in payment (and competing with Alipay and others) is critically important. And yet, Apple has been slow to unroll Apple Pay around, market it aggressively and use it extensively. (I’m still waiting for it in the Netherlands, where for quite mysterious reasons the service is unavailable as for now.)

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« Even Apple doesn’t know what you bought. Or where. Or how much you paid. » – Apple promotional content on privacy.

Yesterday, as a follow-up to the December catastrophic hit on Apple’s market cap, many things were announced. All of them revolving around « more services ». That involved TV, newspapers, and… banking. Yes, a clear step up to just Apple Pay with an Apple Card and a clear emphasis: we are making a credit card designed by Apple, not a bank.

I would say that on principle banks (retail banks) had it coming. If Apple has been complacent unrolling Apple Pay up to now, banks have been bloody irresponsible at letting everyone else enter their playfield, offering damn good alternatives at banking, payment and credit for the last 5 to 6 years (check N26 success if you haven’t).

Now, I’m being cautious with all this.

I do believe that the days were banks were dominating the retail market are just gone. Of course there’s still Mastercard and Goldman Sachs (!) as Apple’s partners. And in that regards, Apple seems to try to be forthcoming:

At Apple, we firmly believe in your right to privacy. That’s why we created a unique architecture for Apple Card that generates things like your transaction history and spending summaries right in the Wallet app on your iPhone. — Apple

Could we trust them to maintain high privacy standards through these incumbents? Maybe. Remember that Apple broke the music industry by partnering up with the majors when they launched the iPod, or and that the iPhone was launched with AT&T. So there’s that.

The core question where I’m still not convinced is on how successful will Apple be at transferring its one billion customers using on a daily basis their hardware (and already with a bank account connected to iCloud) to the card?

The ease of use on mobile, frictionless integration with everything’s Apple, lack of bank fee, real-time control on your budget, cash-back on purchases, … All of these are nice. But « Variable APRs range from 13.24% to 24.24% based on creditworthiness. » for the credit part?! Wow, that’s very goldman-sachy if you ask me. And although using a banking card as a credit card (not a plain debit card) is very a American (and UK) thing, there is something wrong there. Something not completely designed and well thought-out?

Maybe Goldman Sachs had indeed too much to say about it, but maybe (and I’m trying to be optimistic) it’s a temporary thing. Remember that Apple rarely gets its first version of a product right, or « complete ». The iPhone was launched without the App Store, and more recently it took several iteration before the iWatch jelled as a health / fitness device.

So we will see how fast they unroll their card and how far they intend to go. But I will say that how they will adapt it around China payment needs will be setting to watch very closely from now on.

An interview on CNBC seems to indicate, that yes, they’re going for it…

“With that product (Apple Card) we are going to start in the U.S. but over time, absolutely, we will be thinking of international opportunities for it.” — Richard Gnodde, CEO Goldman Sachs

Keep in mind though, that it’s not Tim COOK committing to this yet…