Apple has announced its official entry into the fintech arena with the launch of its own credit card, currency exchange services, and cashback incentives to potentially entice its one billion-plus users away from their mainstream banks.
During the launch event, Apple CEO Tim Cook said that the firm “saw an opportunity to transform another fundamental method of payment. That’s the credit card. We think Apple’s uniquely positioned to make the most significant change in the credit card experience in 50 years.”
At the moment, the service offering looks pretty sleek and simple, and very much in line with other ‘virtual’ banks like Revolut or Monzo, who have respectively been gaining significant traction with consumers over the last few years with their own digital banking alternatives.
The Apple Card will be issued by Goldman Sachs and MasterCard will provide support as a key payment processor. The iPhone can now be used as a wallet and will become the new hub of all forms of payments (either online or offline).
The banking app also looks set to leverage location and other data from users’ iPhones to help track and provide insightful information about users’ spending habits.
Of course, there will inevitably be instances where a physical card will be required, and it looks like Apple’s offering will certainly stand out from the crowd. The card will be made from a luxury composite (titanium) and has no card number, expiry date, or even signature on its super-sleek design.
As of late, Apple has been struggling with falling revenues for its hardware products. Over the years, we have seen handset prices from the firm skyrocket and innovation stall as a flurry of smaller and more nimble hardware providers have taken market share away from the tech giant.
With the firm now under pressure from Wall Street to get back to its $1 trillion valuation, we may see the Silicon Valley giant look to expand its highly profitable services and now fintech divisions to follow competitors in the space by offering other financial services such as loans, investments, trading, and maybe even cryptocurrencies.
Another rumoured route for Apple could be to launch its own native (and fiat-pegged) currency on its wallet and banking platform. In terms of active users for its iOS platform, Apple surely rivals the reach of Facebook to hold the crown of the world’s biggest single place to interact and do commerce.
Facebook has recently been heavily rumoured to be entering the native currency market with its blockchain-based payment system, potentially set to be unveiled later this year.
Over the last 50 years, we have seen little innovation from or disruption to mainstream banks. Fintech players have seen growth as of late, but the scale of their user base is still significantly disadvantaged when compared to the payment providers they need to support the core functionality of their payment and currency exchange capabilities.
With a player like Apple entering the scene, the company may actually have the scale to control enough of the touch points of payments to one day say that it can handle everything ‘in-house’ (potentially on its own blockchain) faster and cheaper than the legacy payment providers. This would truly bring some much-needed disruption to the legacy banking industry as it stands today.
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