The Creation of ‘Apple Bank’: The Company is Delving Deeper into the Banking Sector

Technology companies have long moved away from their original products, with Amazon, for example, entering the healthcare sector by acquiring various healthtech companies, including One Medical last summer, while Apple seems to be increasingly entering the financial system.

Last week, Apple launched Apple Pay Later, a new service that allows users to pay for online purchases in installments, thus joining the fintech trend of ‘buy now pay later‘, which we have previously reported on in Lider. However, this is not the company’s first step in the ‘financial’ direction, as noted by Milan Horvat, CEO of FIMA Plus, who highlighted on LinkedIn that Apple is becoming a serious competitor in the rapidly growing BNPL market.

‒ Apple has already been collaborating with Goldman Sachs on the development of ‘Apple Card‘, a service for direct loan offers and deposit savings, for which it established a wholly-owned company, Apple Financing ‒ wrote Horvat, adding that Apple also acquired the British company Credit Kudos last year, which developed open banking technology for providing online creditworthiness assessment services for clients.

Indeed, in August 2019, Apple launched its credit card designed to help users in the U.S. lead a ‘healthier’ financial life, with Goldman Sachs, as the issuer of the Apple Card, responsible for insurance, customer service, the underlying platform, and all regulatory compliance issues.

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In October last year, Apple also announced a new savings account for the Apple Card that will allow users to save their daily cash and increase their rewards on the Goldman Sachs savings account.

These are not the only steps Apple has taken in the financial system. The company launched Apple Cash in 2017, a digital card that allows sending and receiving money and is directly integrated into the iPhone. Additionally, Apple Pay was launched back in 2013, a mobile payment service available on all Apple devices.

According to appleinsider.com, Apple Pay is now available in over 50 countries and territories worldwide, and Horvat noted in his post that this service is estimated to have over 500 million users.

‒ Apple’s strategy here is super simple; it currently earns a percentage from every Apple Pay purchase. The BNPL service (although currently free) will encourage Apple users to make more large purchases within its ecosystem. These include iPhone devices or computers, as well as upcoming innovations such as VR/AR headsets or perhaps even the Apple Car. They are moving from selling their products to enormous sales opportunities for others ‒ claims Horvat.

As Horvat stated, since the ‘Apple Pay Later’ services will actually be financed from its own balance sheet, this is essentially the first step towards creating an Apple bank.

‒ Knowing its size, this would indeed be a significant leap that could change fintech as we know it today in the Western world ‒ concluded Horvat.

How significant a leap Apple will make in fintech and whether this is the beginning of the creation of an ‘Apple bank’ remains to be seen.