Gravity
Gravity – cartoon that illustrates Apple’s increasing impact on the financial services industry.
For the incumbent banking providers, new entrant Fintechs have not moved the needle – the IMF calculates that the current volumes of FinTech finance are around 2% of the total credit in major FinTech markets and neobanks have only 3.3% user penetration.
In the US, Bank of America has 118M customers, while leading neobank Chime has 13M. With the decision to pull out of the Goldman Sachs partnership, Apple has now the potential to significantly upend this situation.
While we all wait breathlessly for Apple’s next category changing hardware product, the company is aggressively growing its service business that increased by 16% to reach $22BN in Q3’23 revenue.
The company’s model seems to try and avoid becoming a regulated entity, but partner with banks and then carve out their own business.
For example, Apple initially started with separate partnerships around payments, cards and credit, which it has now evolved into Apple Pay.
In the UK, Apple uses Open Banking, which enables users to view their current account balance directly from their banks.
Additionally, users can access a detailed history of deposits and payments, allowing them to track their spending patterns and gain a better understanding of their financial health.
With Open Banking prevalent across Europe and the imminent launch of the CFPB’s Personal Financial Data Rights in the US, incumbent banks need to realize that a technology giant with 1.5Bn iPhone users is coming for their lunch.
