It didn’t exactly come as a surprise to us when Apple announced they were diving headfirst into the financial industry with their “Apple Card” — a credit card being issued through Goldman Sachs and supported by MasterCard. We’ve been predicting Big Tech’s ascendance in the financial space for some time; it’s a lucrative market, and one starving for the kind of innovation technology companies love to offer.
But here’s the thing: Apple hasn’t really offered anything transformative with their new Apple Card. While it’s branding is typically lovely and it appears different on the surface, it merely repackages a credit product that most banks are already offering. Apple has tried to simplify its offering along with at least one unique feature that other financial institutions do not provide – a real time interest calculator. While any push by Big Tech into the financial industry (including their Apple Card) rocks the boat, the Apple Card is a long way from making serious waves that will have long term consequences.
For banks that want to offer similar features in products (and not just limited to individual credit cards), the technology currently exists and is readily accessible. Here’s what you need to know:
The Ins and Outs of the Apple Card
For a company known for pushing the envelope of innovation, the Apple Card is remarkably uninventive. That being said Apple lately has taken the approach of taking an idea and making it better rather then innovating something drastically new. To qualify for it you need an iPhone and existing credit, although Apple has been pretty vague about exactly what credit scores will be required. Once launched this summer, you’ll be able to apply through the Wallet app and receive a digital card once approved.
You can use the titanium physical card anywhere or the digital card at any place that accepts Apple pay. The perks are pretty decent, at least on the surface. Apple is offering a no-fee card with 2% cash back on Apple Pay purchases and 3% back on Apple products.
There’s a couple of neat features that come with this card including a detailed interest calculator to help inform your purchasing decisions and make the most of your cash back. Additionally, all cashback you earn is deposited directly into your wallet daily — offering an important sense if instant gratification.
That said, in spite of marketing itself as a “no fee” card, this Apple product notes in their terms and conditions that: “Late or missed payments will result in additional interest accumulating toward your balance,” effectively finding a new way to recoup the losses of a no-fee offering from customer behaviour.
In essence, this credit card is a conventional bank product offering, dressed up in the slick branding of Apple with a couple of interesting features. While it indicates one more encroachment from big tech into the financial industry it shouldn’t ruffle too many feathers — yet.
What Banks Need to Start Thinking About
While the Apple Card itself isn’t a harbinger of doom for banks, it nonetheless sets Apple up well to start competing more directly with traditional financial industry. Firstly, it sets Apple up to start accumulating valuable financial data on its customers, and begs the question of how they will leverage such information in their future incursions into banking.
Apple is also setting the stage for cross selling financial products with its other products and services through its app store or other channels. If it succeeds in creating a marketplace like this, than we’re officially looking at a major game changer. But it’s not here yet with just the Apple Card which means banks have time to position themselves well in advance.
Right now, one of the most compelling part of Apple’s credit card is the ability to instantly gratify customers with daily cash back. Who doesn’t like a little money everyday? Which actually leads into the other product Apple is offering — the cash account into which the cash back rewards are deposited. It’s flying under the radar for now, but could quickly become a cornerstone product.
Very few traditional banks are offering something like daily cashback right now, as offer fulfillment can be a tricky thing for legacy systems to validate and issue quickly. But if banks want to keep up with the pace that Big Tech is pushing, moving slowly just isn’t going to work in the long term. While the Apple Card isn’t a revolution in and of itself, it shows promise and glimmers of what might come.
Luckily, many banks are finding the best way to keep pace is to partner with FinTechs who can offer them the agility of Big Tech. In the case of the instant gratification, why settle for cashback on one product like a credit card? With technology from Zafin, you could implement instant offer fulfillment across your entire product line. This can serve to attract new customers and deepen relationships with existing ones. While Big Tech undoubtedly poses a threat, there’s a lot banks can learn and new technology and solutions that can be implemented to increase the customer-centric experience.
The Apple Card isn’t ushering in a revolution, at least not by itself. But hot on its heels will be other financial products fueled with customer financial data collected by the card. Banks need to start learning from and planning to combat these Big Tech incursions if they want to stay relevant.
The best way to do that is to find ways to improve customer centricity in your offerings with savvy FinTech partnerships. Like what you see with Apple’s offering? Get in touch with us today and find out how we can empower your bank to go toe-to-toe with Apple and other Big Tech players looking to get into the financial industry.
Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.
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