Why is Apple taking a bite out of banking?

Written by Dave Wallace
26th May 2023

I am, on the whole, a delighted Apple customer. And as a fintech specialist, I have been fascinated by Apple’s moves into financial services.

For Apple, maybe banking is just another brick in the wall, not the wall itself

I have followed the company’s trajectory from the earliest Mac models, stood at the front of the queue to get the original iPhone, bought (cough) every one of the watches, bought some AirPods, and happily watch its TV and films.

So recently, I have repeatedly been asking myself, “Why are they going into banking?” The logical answer is that the end point is they want to be my bank. But is that right? What if Apple has a bigger play? And if so, what might that be?

Of all the big tech companies (outside of China), Apple seems to have developed the most successful and broadest financial services offering. For example, it recently announced the launch of a savings account in the US, which reportedly saw inflows of $1 billion dollars in deposits in its first four days. Opened in association with Goldman Sachs, it offers a very attractive rate of 4.15%, and according to Forbes, by the end of the first week, it had opened roughly 240,000 accounts. Not too shabby!

Sanjeev Kumar’s research firm WhiteSight has just published a report on Apple, which includes a handy infographic showing Apple’s portfolio and the journey it has been on to embed financial services into its consumer offerings. Looking at it, you realise how methodical and deliberate it has been in building capabilities. Through partnerships and acquisitions, it is slowly starting to resemble a bank.

According to WhiteSight, its financial services aspirations date back to the late 1990s when Apple held discussions with Capital One about creating a joint card. However, it started in earnest with the launch of Apple Pay in the US, partnering with JP Morgan in 2014. Apple Pay has been incredibly successful and is now available in 76 countries. In 2022, there were 507 million Apple Pay wallets globally. Other things of note include the launch of the Apple Card in 2019 and its BNPL proposition in 2023, both in the US and with Goldman Sachs as a partner. In 2022, there were 6.7 million Apple Card holders.

The evidence overwhelmingly points to a business that knows its customers and knows that they will use its FS products and services and make them a lot of money.

As well as a relentless focus on iconic design and building products that its customers will love, Apple has worked incredibly hard on building customer trust. It has made a virtue out of ensuring customers fully understand how much it cares about their privacy. Privacy has sat at the heart of its brand advertising. It is known for not collecting or selling user data, and encryption protects data in transit. This strategy is paying off. It was crowned the most valuable brand of 2022 in Kantar’s BrandZ global report. Kantar highlighted, “Apple’s new data-collection policies for its iOS software have reshaped the advertising and social media industries as profoundly as any government regulations.”

Trust can be leveraged, which can be seen in Apple’s move into FS.

I spoke with another Apple fan, Faris El Mahgiub, an expert in user and customer experience as Innovation and Product Leader for First Abu Dhabi Bank in the UAE, about what he thought was happening. His response was fascinating:

“The Apple approach has been to build outstanding products, build trust, build excellent services, become fully trusted and then make financial products/services. But is that where it stops? What do I mean by that? Look at the old banks. Despite everything that has happened through crises and mis-selling scandals, our ancient hunter-gatherer brain, which craves security above almost everything, still trusts them, which means we stay with them, encourage our children to become their customers and then buy products and services from them.

“I hypothesise that Apple has been working hard to connect to that ancient brain and create an intrinsic, old bank-like trust relationship. Trust to them is the most potent asset. Apple may see that financial services products are a way of reinforcing and deepening that trust relationship rather than being the endgame.

“Perhaps there is one more to add to the flow chart. Build outstanding products, build trust, build excellent services, become trusted and then build financial products/services and hey presto, become fully trusted!”

But why? What does Apple see that has resulted in such a focus on trust?

We live in a very uncertain world. Social media has demonstrated the power of 140 characters in changing the geopolitical landscape or how clicks, likes, and algorithms can polarise a society. Generative AI is throwing up entirely new things to worry about. Where is content coming from? Is it real? Maybe in all this uncertainty, trust becomes the most valuable asset.

Perhaps Apple can see the emergence of the “Trust Economy” and, for its customers, wants to sit at the heart of this economy, becoming a true partner to help people live their best lives. Apple could become a remote control of our lives and a filter onto the world, allowing us to sleep better, eat better, shop more consciously, manage our money, act as arbiter on the news we receive, and manage our social lives. It is well on the way to this already.

Maybe banking is just another brick in the wall, not the wall itself!

About the author

Dave Wallace is a user experience and marketing professional who has spent the last 25 years helping financial services companies design, launch and evolve digital customer experiences.