News Apple may work with Goldman Sachs to launch credit services via Apple Pay shouldn’t surprise anyone — technology is transforming the entire financial system as your iPhone becomes more than a wallet.
Apple Pay plus
We don’t know much about what’s being planned.
We’re told it is an Apple Pay-branded credit card of some kind, though I doubt we are looking at any branded plastic card — more likely a virtual card enabled within Apple Pay on your iPhone.
I also doubt if this “service” will remain confined to credit.
Together, the two partners have a chance to impose new models around banking services — both firms have a global reach, and Goldman Sachs offers its new consumer-focused Marcus brand, which could be extended.
The move may also see Apple abandon its existing relationship with Barclays, whose CEO, Jes Staley, last year warned: “All the banks are very focused on the payments space. That may be where the battleground of finance is fought over the next 15 years.”
And Apple CEO Tim Cook earlier this year said, “I’m hoping that I’m still going to be alive to see the elimination of money.” Which kind of matches the company’s direction of travel.
The challenger banks
Reading between the lines it seems possible Apple is seeking to explore the same space as the emerging “challenger banks” — tech companies offering financial services that provide compelling alternatives to those offered by conventional banks.
Revolut is a great example of these. Using a smartphone app, the award-winning service is almost completely virtual, offers pre-paid credit cards, cryptocurrency services, and free international money transfers, and always swaps currency at the lowest available exchange rate.
The company plans to roll out in the U.S. and to offer sundry investment services in the future. Revolut only launched in 2015 and is now valued at $1.7 billion.
This move by technology into banking has been partially enabled (I feel) by the greed of the financial institutions we the people were forced to bail out after the 2008 crash. Our reward? We still pay international transfer fees when money has already pretty much become virtual, even while we also pay interest on the cost of their failure.
Apple and Goldman Sachs must surely recognize the potential to offer a completely international suite of banking services. Stick a little blockchain inside the scheme, and there’s even the potential to extend financial services to the billions of people who don’t currently have any access to them.
Scale matters. The profound social benefit this could unlock is potentially as transformational as the new aluminium manufacturing process Apple supports. Making Apple Pay Cash an international service is a step in this direction.
The time is right
The time for radical change in the financial sector is right. On the frontiers of bitcoin-land you find many people for whom cryptocurrency is seen as direct action against a banking sector they no longer trust — which is why established providers are so hostile, I suppose.
Apple often boasts of the customer satisfaction scores it achieves across all its products — that kind of emotional loyalty can’t be bought, only earned over time. It’s open to question if working with Goldman Sachs will dilute Apple’s brand or strengthen both names.
Momentum favours Apple. A few years ago people still acted surprised at the notion the iPhone would one day become your wallet. With Apple Pay, today’s iPhone is also becoming your passport, your driver’s license and your front door key — effectively replacing everything you once carried in your pocket, and (inevitably) one day offering all those functions and more in the form of an Apple Watch.
Siri and the synchronicity
In the other corner, we have voice assistants.
In the context of what is happening in financial services (and don’t even get me started on the impact of AI on the insurance and loans markets), it seems more than reasonable to predict that Apple and Goldman Sachs will eventually extend other financial products via the Apple Pay service: Think mortgages, savings and loans.
Once they do, it will inevitably become possible for you to walk past a house that’s for sale, ask Siri for details about it, and arrange a loan to purchase the place with just a few taps on your AirPods — given Apple’s service may be able to (privately and securely) check your credit and personal health status. Is this a Big Opportunity, or a step closer to Big Brother? You decide.
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