Apple Card: The industry reacts

Apple pushed further into financial services when it announced Apple Card, a system that puts some of the best features of challenger banks inside an iPhone-integrated package.

How is the industry reacting to the Cupertino spaceship landing in their yard?

The UI of digital everything

The bottom line of Apple’s foray is that it reflects and amplifies some of the big challenges that established financial providers face when grappling digital realities:

• Design is everything.
• User experiences must be as well-designed as any other digital tool.
• Customers want contact.
• Rewards are important, but user experience is everything.
• If you can do it in a bank, you should be able to do it on a phone.
• When every digital service is more or less the same, how do you stand out?
• Privacy matters.

Of course, bringing sophisticated financial products to market is hard.

While challenger banks can move fast and break things, existing providers cannot, which is why some of the big names in the sector partner with tech firms to create digital services.

(Incumbents in the space cannot move fast in part because of silo-based traditional business structures, but also because they are subject to higher standards of regulation and oversight given the deposits they already hold.)

The Apple Card/Apple and Goldman Sachs partnership is just the latest partnership that anyone who knows the sector knows is the go-to approach for established providers to make a digital play: Work with tech partners who probably do it better.

What the industry is saying

Since Apple Card was announced, what do players in the fintech game think?

Crypto users are very interested in Apple Pay Cash, which they see as an Apple crypto backed up by real money. Competing mobile platforms recognize they fundamentally cannot deliver user experiences that match Apple’s offer.

What about fintech?

Existing challenger banks certainly seem aware Apple has taken some of their tricks – though to be fair, so are the established incumbents. Look to HSBC’s decision to offer a Revolut-like card freeze/unfreeze option via its app, or Unicredit’s 24/7 digital concierge service.

This is not a drill

Apple’s offer matches today’s digital customer expectations around user experience, platform integration, debt and spending management tools, attractive fees and privacy.

It may not deliver the best rewards, but it will deliver an Apple-quality user experience.

“Apple and Goldman Sachs have put together a very attractive drawing on some of the best features of existing cards and adding in a few innovations,” noted Jim Miller, vice president of banking and credit services at JD Power.

And Megan Caywood, Barclays’ global head of digital strategy, wrote, “Love seeing Apple nail the challenger bank playbook.”

Apple has taken a big step to redefine the industry (I wrote about this here), but this has not happened all of a sudden. It has taken years of thought, during which the company has assembled multiple components for secure digital payments (including biometric ID) and gathered a digital nation of Apple Pay users that it persuaded banks to support — culminating (for now) in a customer-experience-friendly-by-design credit card.

Across this process, step after layered step, Apple has built a foundational core from which it can now extend into almost any financial service.

I’m guessing health insurance will eventually be part of this offer, though getting there will also take time.

Apple’s laser focus

Considering the patience and rigorous approach Apple has taken, Ramin Niroumand, CEO and founder of fintech builder Finleap wrote, “Expected, but still huge when you see it in real. Stunning how ruthless or should I say, laser-focused Apple acts. Creates customer pressure on banks to sign up for “Apple Pay”, which creates larger acceptance, and then this…”

One company called 11:FS offers digital transformation support services to the financial industry. In a Tweet, its CEO, David M. Brear, pretty much told us what the industry is thinking: “This isn’t a drill, banks. This is the moment you’ve worried about,” he said. “Say bye to your customers.”

Scientist, analyst, and voice AI expert Brian Roemmele sees it this way: “Apple has done more than introduce a new payment card. Apple has reengineered everything we have come to know about the entire experience.”

Apple won’t stop here

Look at it this way: If you use Apple Card and Apple Pay to purchase products and services regularly, you’ll soon build up a nice stash of Apple Pay Cash.

A real-life cryptocurrency already inside Apple’s garden that, with Apple Card, works internationally just like real money and feels like “free” money.

There’s so much potential to that.

Foreign exchange? Peer-to-peer payments? Micropayments for content? 

Roemmele believes ApplePay Cash will be part of a force that fundamentally changes “the former advertising models for content,” particularly in the voice UI space.

A force that changes advertising models.

Let that thought sink in.

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