Will Apple be your future bank?
June 23, 2016
Apple Pay has made a significant step towards becoming your bank. This is just the beginning. The largest Canadian banks have negotiated an arrangement with Apple that allows Apple Pay to participate in retail purchases of $100 or less.
Customers will need a recent iPhone or Apple Watch to participate. They can store their credit card and debit card information on their smart phone, and no longer need to carry plastic bank cards. Welcome to the age of the “digital wallet”.
The convenience factor is important to everybody, particularly younger millennium shoppers. As an added bonus security will be enhanced.
Apple will benefit from this evolution in many ways. It receives a small fee every time a transaction is completed.
Approximately 38 per cent of Canadians use an iPhone. Now, those customers who have an older model will be encouraged to upgrade to be able to participate in Apple Pay.
The most significant aspect of this new arrangement is that Apple has strategically placed itself between the bank and the banks’ customer. The tech company has a big appetite and our view is they will want to expand their services, and the fees generated, in the future.
Our capitalistic world is changing every day and there are companies that are aggressively attempting to disrupt how business is transacted. A good example is how Uber has revolutionized the taxi industry.
There is a lot of speculation about the future of Apple.
Many think Apple hopes to revolutionize cars, healthcare, and financial services.
The advantage Apple has over banks is technology and innovation. Customer preference is to have products that are simple to use, safe, and enjoyable. That has been the magic of Apple.
Banking has been around for centuries. Customer needs and preference will push the banking industry to be better.
Being better will involve using technology and many anticipate that Apple is in a better position to provide that technology than established banks.
Apple has started to muscle its way into the financial services business in other parts of the world too. The U.S. and the U.K. have previously allowed Apple become part of the retail payment process.
The big winner as a result of retail banking payment options is the customer. Customers always benefit from competing firms trying to improve their service.
One of the reasons we complain about the high cost of cell phone service and cable television is because there is not enough competition. Lack of competition means the power lies with the distributor.
Canadian consumers have just had a banking upgrade. Now we will have banks competing for our business as well as Apple and other tech firms that are attempting to participate in the lucrative area of financial services.
Canadians want the best banking service they can find. Good services at a reasonable price.
The only unknown is will banks be able to adjust and survive or will they be pushed aside by tech savvy firms like Apple?