Apple takes (another) bite out of banking

You can’t spell “fintech” without “tech” and Apple is doubling down its investment in the financial services space. It’s been almost a decade since Apple launched “Apple Pay” (its digital wallet), and the company has since introduced “Apple Cash” (a peer-to-peer payment option like Venmo or Paypal), and the “Apple Card,” a credit card. Its latest products in fintech include a buy now, pay later option, “Apple Pay Later,” and a savings account.

The savings account furthers the tech giant’s partnership with Goldman Sachs, which helped launch the Apple Card in 2019. So, what does it mean when a tech company worth 2.6 trillion dollars decides to break into banking?

“This is Apple becoming more of a fintech-type company, and shows their seriousness about being that entire suite or package when it comes to the fintech space,” Angelo Zino, a senior equity analyst at CFRA Research, tells Vox.

Apple is using the interface that iPhone users love and hoping to extend that reach into users’ personal finances. The timing of this comes after high profile collapses from Silicon Valley Bank and Signature Bank. Chris Nichols, Director of Capital Markets at SouthState Bank tells Forbes, “A bank will either have to compete with Apple, which would be hard to do with a wallet, or create microservices within different types of wallets. Apple articulated that well with their colorful, easy to read dashboard that many banks have struggled with.”

But what are the downsides? As Vox's Sara Morrison puts it, “It’s not necessarily illegal for a company to make products that its customers want and that work well with other offerings. But Apple is a massive company with an incredible amount of control over its users as well as the companies many of its services compete with.” Morrison continues:

You can see why its expansion into finance would make antitrust advocacy groups wary. The American Economic Liberties Project warned against Google’s (now shelved) plans to launch some kind of bank account service in 2020. The organization said at the time that “the continuing push by Big Tech deeper and deeper into banking is at once alarming and totally unsurprising. It is a nightmarish example of the ways monopolies like Google can bully their way into new industries and it will open the door to all kinds of abuse.” Those concerns apply to Apple, too.

“There’s a reason we have traditionally separated out commerce and banking,” Matt Stoller, Research Director of antitrust advocacy group American Economic Liberties Project, tells Vox.

It's a lot to think about! At S.S. Scale Advisory Services, we strongly believe that community banks have a critical place in this ecosystem. It’s one of the reasons we’re passionate about payments. We love that we can bring the top technology in the field downstream to smaller financial institutions so they can stay competitive with tech giants like Apple. We’re also big fans of the personal connections we build with our clients and partners. Embracing technology while moving community banks forward is what we’re all about.

For More:

Forbes, Why Apple’s Partnership with Goldman is The Future of Banking, by Emily Mason

Vox, The problem with Apple’s big banking push, by Sara Morrison