Apple already offers a few financial services, such as Apple Wallet, Apple Pay, and Apple Card, as more large digital firms want to develop and take over the financial tech market. However, it’s realistic to assume that Apple wants to go a step further and become a significant participant in the financial industry, maybe becoming your next bank. Here are five reasons why Apple might:
- Apple has a solid reputation and a devoted customer base.
Apple has evolved into a new component of the body, a lifestyle brand. Adding more financial services to the iPhone is another method for Apple to become an even more important part of its customers’ life, making switching hardware suppliers more difficult. Because of what Apple stands for and its brand, customers trust the firm. They believe Apple is built on a stable basis and will be there for them in the years to come.
They also understand that they have sufficient funds to invest in R&D. As a consequence, the quality of the services will continue to improve.
Apple has a large and multinational client base that is not simply loyal. According to Apple, there are already 1 billion active iPhones worldwide, with 45.3 percent of smartphone users in the United States owning one. As a result, if people can trust Apple with their bank accounts, it might be “the winning punch” when compared to other credit cards that offer similar benefits. Finally, Apple has the backing of millennials, a group that has a different perspective on banking as a result of the technology they grew up with.
- Apple understands the importance of providing a positive customer experience.
Traditional banking systems are frequently criticized for their lack of a user-friendly interface for viewing transactions and performing operations, ranging from routine financial transfers to stock trading.
According to Jason Wise, chief editor at Earth Web Apple excels at making complicated procedures look straightforward to the end-user. As a consequence, users will be able to interact with their banking platform through a simple and intuitive interface that gives them a quick overview of their financial condition. By purchasing or collaborating with significant personal finance fintechs,
Customers would receive clear information and suggestions on how to get the most out of financial services from Apple. Furthermore, Apple may use its relationships with merchants and manufacturers to offer customers a variety of benefits, such as cashback and incentives. To summarise, Apple understands what customers want and how to offer it.
- Apple will have to come up with new ways to sell iPhones.
Big tech businesses must continue to innovate over time. When it comes to new iPhone designs or introducing additional subscription services, however, there is a limit to how much profit Apple can increase. The finance business would be a good place to start if you want to maintain developing and become a mega-tech firm. Apple, on the other hand, is drawn to the banking sector for reasons other than its financial rewards.
Apple’s primary goal is to become an increasingly more important part of its customers’ lives, making it more difficult for them to switch hardware suppliers. Furthermore, if Apple is successful in providing a superior banking experience, non-iPhone users may be enticed to buy an iPhone in order to use these services.
- Apple has a large amount of unspent cash on hand.
Apple has roughly $200 billion in cash on hand right now. That’s more than Goldman Sachs’ whole market capitalization. With such a large sum of money, it’s critical to fund fintech acquisitions or build the requisite vast banking experience. Furthermore, if Apple is interested in becoming a full-stack bank, having cash on hand is necessary to meet the regulatory requirements for establishing a banking system.
- Expertise in data analytics as well as security.
Apple is the market leader in data management and processing. “Money is essentially a kind of data, and Apple has been brilliant at regulating access to data,” says Alex Alexakis, founder of Pixel Chefs. They’ll approach money in the same way.
Furthermore, Apple is recognized for providing clients with enhanced security, which is critical when it comes to payments and banking. All of the new devices have biometric security built-in, either “Touch ID” or “Face ID,” which are used to approve purchases through Apple Pay and Apple Card.
So, will Apple ever become a financial institution?
“Apple, like other large tech businesses, will continue to add services that are peripheral to banking to their existing offerings, without embracing full-stack banking,” says Jason Porter, a senior investment manager at Scottish Heritage SG.
For many businesses, the hassle of obtaining and keeping a banking license would be too much of a risk. They will instead continue to work with licensed partners. This looks to be the most likely direction in the next years.