Apple Bank is only a matter of time

“Around early 2004, Apple Inc. executives were in a strategy meeting when they began to complain about their cellular phones,” David Weidner writes for MarketWatch. “They mocked the design, the functionality or lack of it — just about everything. Apple founder and then-CEO Steve Jobs called them ‘brain dead.’ …That meeting, of course, was the seed that eventually led to the first iPhone, debuting in 2007. It also was the making of a near-fatal blow to the cell-phone establishment at the time.”

“It’s only a matter of time before Apple, or another technology company, launches a bank. No, we’re not talking about simply partnering with a bank or just linking with a payment system such as Visa or MasterCard but actually becoming a bank or buying one,” Weidner opines. “This week, the tech bank moved one step closer to reality when Apple announced a new tap-to-pay system called Apple Pay for its latest iPhone model[s] and newly unveiled Apple Watch.”

“Banking, for all of its strides in the online and mobile space, still ranks below other industries in customer satisfaction. It ranks behind automakers, credit unions, apparel stores, insurance companies and just a notch above the U.S. Postal Service, according to the American Customer Satisfaction Index,” Weidner writes. “All of this brings us back to that meeting more than a decade ago where Jobs called cell phones ‘brain dead.’ It’s not a fantasy to think the same conversation is going on somewhere in Silicon Valley about banking. Someone is complaining about his or her bank and thinking, ‘we can do this better.’ What’s remarkable is that, as Apple Pay shows, in many ways they already are.”

Read more in the full article here.

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    1. Bitcoin is incredible technology but it still hasn’t gong mainstream because instead of focusing on new currency uses (micropayments, programmable money, etc.) the development team is uncreatively just competing with existing systems with the hope that they will one day be more efficient (clearly Bitcoin is very efficient in some ways, but since it is not widely used it remains very inefficient other ways.)

      Apple has the ability to focus, reframe the problem, and solve the real end-to-end usability issues. This is exactly what is needed. If Apple did a crypto currency right they would completely upend the whole financial world in a year.

      They should call the coins Apples or iBucks.

  1. Part of the problem with banks… Is regulation. It’s regulated in all the wrong ways. I think Apple might opt out of this venture for the following reasons:
    1. Apple does not want to deal with the heavy regulation imposed on banks. Remember we heard similar arguments brewing a few years back that it was only a matter of time until Apple would become it’s own wireless carrier.
    2. AAPL would begin trading like a financial stock. This is probably not something that Apple (or it’s shareholders) would be fond of.

    1. The primary reason for bank regulations is because “banks” take deposits from the public in the form of things like savings and checking accounts. Nonbank financial firms proliferate which do not take deposits and therefore have a relatively light regulatory burden and are in no way held to similar standards as actual banks are.

      Could Apple buy or build a nonbank financial company? Absolutely. Would they? Meh. If Apple Pay gives them a bite at all credit card transactions there is little to gain from going beyond that. Offer direct financing for the sales of their products worldwide? Probably best handled by established businesses and not worth the bother.

    2. Too sad to laugh about it!

      “heavy regulation” is
      • why Goldman Sachs struggles so hard to stay on top
      • why Standard & Poor’s is almost broke as well
      • why software trading became a threat of its own
      • why you obviously do not see the wood for the trees

      But there are some other good reasons why Apple might avoid this step.
      The stock market is a dangerous place for companies with a lot of substantial assets these days. It became a playground not only for ruthless traders but also for backdoor hackers.
      But offshore money might be stolen sooner or later as well.

      So the discussion should NOT be if Apple Bank might face heavy regulations, which is in fact a bad joke when you take a serious look on the global financial market.

      The discussion is about ethic fundamentals, the same it was for decades, the reason why hedgefonds are a threat not only to starving third world people:


      This means if there is a lot of money you need to protect from taxes you move it somewhere else.
      That is not fiction – it is business as usual.

      Sorry if you miss the irony here, while Draghi is busy ruining the european currency.

      1. What exactly are you saying, cross? That the world should adopt U.S. banking laws (or German laws, which might be better)? Or that the U.S. should scrap its banking laws to grab more of the pie?

        The free market tends to go to excess in the absence of regulation. Occasionally, it goes to excess even with regulation. Sometimes the free market finds a way to get around the rules. Sometimes the rules are inadequate or poorly written.

        The key is the proper amount and type of regulation with safeguards for the little guys who get trampled when the big money plays fast and loose with the rules and the risks.

    1. Uh, they wouldn’t. michaeloftroy properly notes the regulatory burden Apple would have to take on. More significantly, Apple would “poison the well” of its partnerships. Cook rightly noted the number of major banks that will be partnering on Apple Pay. If Apple becomes a bank in its own right, it will compete against its partners. Microsoft did that when it went into the phone business, and that didn’t please their partners, some of whom decided to go their own way.

  2. That has been a long predicament… Apple is lining us it’s ducks and financial services first and getting them well established, at which time they can spin off the Apple Financial Empire …

    1. if you listen to that just released charlie rose clip, Cook states that tv needs to be changed. he said when you turn it on the interface takes you back to the 70’s.

  3. What follows is speculation.

    For Apple to become a bank, Apple might be really change its relationship with the customer, either voluntarily or by regulation. This new “DNA” might require Apple to maintain credit scores on its customers. If there’s debit accounts only, that’s one thing. But if credit cards, then watch out Visa and Mastercard.

    Or, Apple just buys up Visa.

  4. The only questions, as Apple continues to grow, is how to deal with both broad-based lawsuits and governments intent on breaking up the company.

    These are formidable challenges. History suggests that these threats will grow by orders of magnitude as the Apple franchise moves forward.

  5. An Apple bank would be a straightforward extension of the new Apple Payments system. Banks come in many flavours, but Apple could pursue a simple transactional bank with, or without, a credit facility. The onerous aspects of bank regulation apply mostly to the speculative areas of banking which engender a lot of risk and which congress has thus far failed to tame.

    Apple has a mountain of cash. They could decide to make this available to blue-chip Apple customers as a line of credit to fund purchases of Apple products, or general purchases. However I suspect Apple would want to avoid anything which would place them in a position where they would find themselves in dispute with an Apple customer.

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