Banker warns: Apple threatens banking system

“Commonwealth Bank chief executive, Ian Narev, is the first banker to spill his mental load on the prospect of tech firms deeply disrupting the financial services sector,” Jonny Evans reports for Computerworld. “Speaking at the G100 Congress in Sydney this morning, Narev observed that accelerating network speeds and the rapid evolution of smartphone apps is already changing the industry — but he anticipates even bigger threats in future.”

“‘We consider we have got very, very good competitors in the major banks, we have got very good competitors in the next tier banks,’ he said. However, he isn’t just worried about other banks, but also technology firms who are already cash-rich and international,” Evans reports. “‘The Apples, the Googles, the Samsungs, the Paypals, the credit card companies, who can pick particular slivers as a result of the application of technology into financial services and compete,’ he said. ‘”We need to be prepared for that.'”

Evans reports, His warning may sound a little preposterous: after all, can Apple really become a bank? Possibly… Apple already has over 400 million active iTunes accounts worldwide, each one linked to a credit card.”

Read more in the full article here.

MacDailyNews Note: Actually, as of January, Apple had over 500 million active iTunes accounts linked to credit cards. Half a billion and counting!


      1. Fixed! The problem is it’s been “fixed” for decades, as in “Illegally prearranged as to outcome”. If you mean “repaired” nothing is further from the truth, except for Iceland I suppose.

    1. No, it was a liberal controlled Congress that passed the Community Reinvestment Act of 1998 that did it. That Act required banks to lend a larger portion of its deposits in its local market. Banks complied until they ran out of credit worthy borrowers. That’s when Chris Dodd and Barney Frank pressured the banks to “take a chance”. The FHA, who writes insurance against the default of those loans started losing money, eventually becoming insolvent.

      Mortgage lenders, motivated by Congressional mandate and hampered in their ability to comply, turned to Wall Street. Mortgages were bundled into marketable securities after being insured by AIG, then sold around the world.

      The theory was that credit worthiness of the borrower didn’t matter as much, because the security of the loan was US housing. This led to unprecedented buying by people that should not have been able to get financing, resulting in a massive increase in real estate values (demand vs supply dynamics).

      When the prices got so high, that even with virtually no qualifications required, banks were unable to find buyers willing to buy. Without additional buyers the balloon popped.

      The point is that the banking system was working just fine until Congress fucked with it.

      It should be noted that Sen. John McCain called for more oversight/controls on what he described as a runaway banking system as early as 2001. His efforts went for naught in Banking Committees controlled by Dodd and Franks.

      1. You left out the part about the over leveraging of the housing market by the financial industry undermined the inherent value of the real estate. The real estate balloon would have undergone a normal correction that could have been sustained had it not been for the greed of the banks and investors. They caused the “balloon” to expand many times past capacity resulting in the “pop” being catastrophic instead.

        1. “This led to unprecedented buying by people that should not have been able to get financing, resulting in a massive increase in real estate values (demand vs supply dynamics).”

          I think he covered it there. I’m not disagreeing with you – the financial industry is greedy. You could say they “allowed” the market to become overvalued. Or you could say that they were forced into it by Dodd/Franks, as Gregg very correctly pointed out. They were doing as the federal government told them to, after all. Either way, Dodd/Franks facilitated it, even if the lenders’ greed is largely to blame.

          And the reason that started? To “protect” lenders against accusations of prejudice/racism/etc. because they weren’t giving enough loans to minorities. Political Correctness is destroying common sense. Again, as Gregg correctly pointed out, they should never have qualified for a loan in the first place.

        2. Let’s be real here: Dodd/Frank required banks to lend to people who didn’t qualify under normal lending guidelines, but the banks certainly didn’t lobby hard against it because those loans were all federally insured. This permitted the banks to make more loans, earn more fees, bundle and sell loans on the markets, and make a lot more money.

          So while the government started it, the banks were fully compliant in exploiting the system for their own benefits.

          And let’s not forget the common, everyday people who also benefitted from buying and flipping homes, buying second, third, fourth homes as rental properties for little or no money down, realtors and loan officers who made big buck on commissions, people who made out like bandits on appreciation, etc. etc.

          The blame lies with virtually all levels of the “system”.

        3. Of course the blame lies at every level of the system. I admitted as much.

          But the law didn’t just “permit” the banks to do it, it *required* them to do so. (You started well, then changed horses.)

          I admitted to a level of greed driving the banks. But they were compliant with this to keep the federal regulators off their backs.

          Thanks goodness those 2nd and 3rd loans are near impossible to find now. Flipping is more difficult, at least the quick-flipping that was such a problem for lenders. There are finally some things in place that make more sense. Such as the new (2010) Dodd Frank Financial Reform Whatever Act, wherein they get to put a name on the fix of their previous disaster.

          I don’t see realtors as part of the problem with the lending crisis, and loan officers were probably shown the door if they weren’t getting in on some of that action. That, again, is partly the bank’s fault, but also part of the enforcement that was a very real threat at the time.

        4. Google Janet Reno’s Transcript of the CRA push in 1998. This section makes it pretty clear:

          “We have also focused on the problem of redlining by lenders and insurance companies. This past August we reached an agreement with Allbank of New York. We alleged that the bank had carved out and refused to make loans in urban minority enclaves within the bank’s lending areas in Connecticut and Westchester County, New York. The settlement with Allbank requires it to make $55 million in loans at below-market rate in the areas previously redlined.”

          You *will* make these loans, or you *will* be penalized.

      2. I can’t compliantly disagree with you, however you left out some important points. You wrote a well thought out response. I will try to do the same.

        In 98 the congress was run by Republicans, the White House had middle left President. Unlike now they worked together, compromised, and accomplish things. Like a representative democracy should. In the 00’s we had a Republican Congress and White House; and they did nothing to stop and fix the banking problem. The banks themselves did not try to stop it; they have a powerful lobby and could have. Bush 41 bailed out the savings & lone industry when they got in trouble. Bush pushed this through congress, it wasn’t something he just singed. His son, the one that is not in politics, directly benefited this. It sent a wrong message to the finance industry; the Gov. will bail you out. This does not excuse the Dem’s, both sides have blood on their hands.

        In the 90’s the government did the easiest thing to increase jobs, make something illegal legal. When prohibition ended, there were just as meany people in the liquor industry as before. Except now they got counted and taxed. Roosevelt looked like he created new jobs. In the 90’s it was lending. Loan sharking was a crime, then people could legally charge high interest loans. Looked like we created new jobs, but not really. Both parties responsible.

        Another big problem in the 00’s was the US was keeping 2 books: the normal one, a special one for the war. This was to hide the true cost of the wars. Again, all are to blame, no one in Congress tried to stop this. When Obama came in to office they finally combined the books. Guess what we had the biggest debt in history. Just at the time when we needed some cash to fix a big problem.

        The banks are nervous because the game is changing, and they face a powerful lobby.

        1. You make some valid points, especially in “both parties responsible”. That is more true today than ever before. We need a 100% turnover.

          You are correct that Bush didn’t overturn it. He enforced the existing law of the land, in this case one that started under Clinton. Beats just throwing it all out the window to do whatever you feel like until you can try to create a “fix”. He had bigger fish to fry at the time, whatever you think of the war. (Which, as you also pointed out, had nobody trying to stop it at the time.) I’m all for that 100% Washington D.C. turnover – both sides of the aisle. Keep a few secretaries (not Secretaries), and ditch everyone at a higher “pay grade”. The current system is so broken and out of touch.

          Thanks for coming full circle and getting back on topic, too. Banks nervous from competition rather than bad laws is a good thing, indeed.

  1. If the banks provided great customer service, cared about their small customers, gave you a few percentage points of interest on your deposits, and didn’t charge you 20% on your credit card debt, they would have nothing to worry about.

    But we know none of those things are happening anytime soon.

  2. Apple would be much better served – as would we – if this were to come to pass. They certainly would be putting their billions to better use by becoming a well capitalized bank, than they are pissing it away to shareholders/bettors who are demanding freebees (oh, I mean dividends & buybacks) under the legalized fiction that they are the ‘owners’ of the company!

    The reason why this clown is so worried is because the banksters have a sweet deal fleecing us. They absolutely do not want the disruption of a company coming in and actually giving people value for their money. No coincidence that it’s these same types of people trying to bleed Apple’s coffers of their well earned cash. They see the threat. They want it neutralized, come hell or high water.

    I want Apple to do something simple. Allow me to buy their iTunes cards, stock up my account with whatever amount I need to buy any product they sell – iMacs, music, apps, third party products … whatever. Then simply give me a discount based on whatever they normally add into the price to account for the Visa/MC/Amex slice + the education discount. Whatever technology they want to build into the phone to make it so I can use it to pay for stuff elsewhere (Target, DisneyWorld, what have you) is fine – go crazy Apple – but still allow the small discount based on not using the credit card companies’ bloodsucking infrastructure.

    If they just do that with the iTunes accounts to start with, I’d be making about the same back in discounts as I do in interest at any regular bank account in America, and Apple would have even more cash on hand that they in turn could put a large portion of in any number of liquid interest bearing investments that would give Apple more return than they’d be giving us in discounts.

    Just a small step like that would be easy for them, good for us, and terrifying for the financial services industry. And I’d rather do business with Apple than BoA or CitiGroup any f*sking day of the week.

  3. And all 500 Million of those credit cards are already linked to a bank somewhere. I don’t see that changing. The banks are safe, for better or worse. In fact, Apple is already helping them out with the current system.

  4. as a first step apple could introduce an exclusive iphone app to transfer money abroad to another iphone/ipad/mac owner. even if you use your credit card (and apple could offer incentives to use your bank account instead) it could offer the service for a flat 4% fee – easily undercutting the moneygrams and western unions of the world. that is a trillion dollar market. even a few percent of it is worth billions.

      1. nope. almost the same fees as western union. the problem is: a big part of the fees is hidden in the exchange rate. the idea is: apple could easily undercut them, make the process clean, simple and transparent and still make a nice profit in the process.

  5. “Speaking at the G100 Congress in Sydney this morning, Narev observed that accelerating network speeds and the rapid evolution of smartphone apps is already changing the industry — but he anticipates even bigger threats in future.”

    Typical Anustralian organization, anything that changes is a threat to their quagmire cronyism and their culture of hate.

    Have a look at the Commonwealth Bank previous attack on their favorite enemy, LOUD MOUTH YANKS.

    There are a whole bunch of these adds, here is another one that must have got the whole Anustralia wanking cause it shows simulated violence against LOUD MOUTH YANKS.

    There are lots more of them just look up Commonwealth Bank Ads on youtube. Some of the comments should open your eyes.

    This culture on this island is a threat to world peace so go ahead Apple, threaten their banking system, heck totally obliterate it. I’ll take a LOUD MOUTH YANK over a fecal filled Anustralian any day.

    1. Interesting isn’t it that companies like General Electric (GE) and General Motors (GM) have (or had) been finance companies for decades and this dolt of a banker doesn’t point out that blatant fact.

      What’s really new here?

      Oh I know: Apple manipulation.

      Oh wait. Apple manipulation has been going on since 1984, and has never compromised Apple’s ideals. That’s why I love Apple 😀

  6. I agree with the well thought out comments and sentiment about Apple and the banking system, but I don’t see anyone addressing a crucial point — where does Apple keep their $B’s in cash while they “redesign” banking? Answer: in banks. Unless Apple is holding on to the physical bills or converting it to some other commodity (gold?) then this is a moot point.

    1. Without digging into Apple’s Irish foreign cash affiliate company system, Tim Cook and his CFO team made it clear that Apple invests its foreign cash. It’s NOT sitting in a bank, allowing THEM to screw things up. IOW: Apple is acting, in part, as an investment bank.

      My POV: The more catalysts for change, the more angst that is thrown at the “Major Banks” the better. These lazy, stupid, customer/client loathing scum require having their parasitic companies ripped to shreds. That they were bailed out was a travesty entirely indicative of their place in our well established Corporate Oligarchy.

      So more power to you Apple. But be aware that defying these “Major Bank” scum means more of the same old APPLE HATE routine, as witnessed by the recent Apple Bear bullshit campaign that manipulated APPL down by ~40%. Also be aware that capitulating to these parasites is the LAST thing you want to ever do, or you’ll be come as SELF-DESTRUCTIVE as they are. Just kick them in the balls some more and they’ll fall over their inevitable and well deserved cliff. We need a new, rejuvenated, respectful, LEGAL banking system.

      Rant over! 😀

      1. Please excuse my ignorance, but I thought that Apple repatriated some monies to invest in development, not all. Once invested, it’s not cash anymore. I thought “cash” in this respect meant readily liquid and available to pay bills, if needed. If the money is invested, is it still cash?

      2. “That they were bailed out was a travesty entirely indicative of their place in our well established Corporate Oligarchy.”

        THREE thumbs up for that! (Don’t ask where I got the spare from.)

  7. Now it begins to come out, slowly but surely, Apple doesn’t get bullied by Wall Street traditions – and that pisses a lot of people at the top, off.

    So, the well-connected banking industry, and its various cronies, penalize aapl by manipulating it’s stock value.

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