August 20th marked Apple’s release of the Apple Card, representing the tech giant’s first leap into the world of financial services. And the banking industry is certainly paying attention.
Available only for customers in the US, the Apple card is a credit card boasting several features designed to offer a superior customer experience. There’s no fees, flexible payment options, competitive interest rates and support via iMessage. Then there’s an app to help customers track spending and better manage their finances, a competitive cash rewards scheme paid daily (3% cashback on purchases at Apple, 2% on Apple Pay purchases, and 1% using the physical card) and enhanced privacy and security features, including the promise not to sell your data to marketers.
And then there’s the card itself: white titanium embossed with the cardholder’s name – bound to become a status symbol for Apple fans (despite criticism for its lack of durability).
If Apple is indeed becoming a fintech, this could get quite interesting. They certainly have plenty of spare cash for product development (profits were $600bn last year) and the potential to gain market share rapidly from their global customer base.
However, it’s still early days. Many commentators have pointed out that Apple haven’t exactly reinvented the credit card; they’ve just packaged it with some new features and a slicker experience (what Apple is known for doing best). After all, the Apple card is still issued by a traditional bank (Goldman Sachs), runs on the Mastercard network, and the reward scheme and APR, while competitive, can be rivalled by other cards.
Even so, it’s yet another example of the increasing disruption of finance by tech entrants, using their innovation and focus on a digital-first customer experience to rewrite the rules. Banks are right to be worried.