What if Apple became a bank?
RRW have been trading on a rumour that Apple’s new iPhone is going to have NFC functionality in the coming Spring. About bloody time if you ask me. NFC (Near-Field Communication) will technically allow you to use your phone as not only an Oyster card, a passport or a debit card but will also allow you to read RFID chips so you can see how much is on your Oyster card, check the microchip of a lost pet against the Pet ID database or even take payment from other people. There’s a wealth of possibilities. Nokia already has devices on the market with NFC built in but has never managed to make it appeal to the public.
Apple being Apple, there’s no doubt that if they were indeed to implement NFC (clearly they’d call it something completely different) they would have some business model built around it in order to maximise profit from the new feature. And banking, micropayment and payments in general could do with a real shake up at the moment.
It might sound ridiculous, it might sound scary or far fetched, but I don’t see why not. If you were to tell me 10 years ago that Apple were going to be the number one music retailer in the US, I’d have laughed in your face and insulted your intelligence. Probably.
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I agree, and made a similar pointy almost a year ago on my blog (Dutch language, but here’s a Google translation: http://translate.google.nl/translate?js=y&prev=_t&hl=nl&ie=UTF-8&layout=1&eotf=1&u=http%3A%2F%2Fmutations.nl%2Fnieuw-en-verwacht%2Fde-app-store-als-universele-mobiele-betaalmethode%2F&sl=nl&tl=en). The translation isn’t very readable but the bottom line is that with the App store, Apple has basically created a functioning micropayment platform. This is currently used only for Apps, but there’s no reason it couldn’t be adapted to a general payment platform. The rumours about RFID addition to the 4G iPhone would add the missing link between the back end payment platform and the front end user device. I can definately see this happening.
http://translate.google.nl/translate?js=y&prev=_t&hl=nl&ie=UTF-8&layout=1&eotf=1&u=http%3A%2F%2Fmutations.nl%2Fnieuw-en-verwacht%2Fde-app-store-als-universele-mobiele-betaalmethode%2F&sl=nl&tl=en)
There’s definitely been a precedent – which the auction houses Christies and Sotheby’s – being lenders to allow people to buy pictures and ultimately making more money from these lendings then their auction fees.
So the idea of a very cash ladened apple becoming some sort of financial institution is not far fetched at all.
The top execs at Dell in the late ’90s used to be very fond of going around saying “What business is Dell in? We’re a bank, right?” This on the basis that they took the customer’s money, built the machine and shipped it all about 20 days before they had to pay the suppliers. I guess they don’t do that so much any more.
A single device (with appropriate security) with my phone, email, internet, credit cards, Oyster card and – hell, why not – front door key all built in would be completely awesome.
What I really need, though, is my security pass built into my iPhone. Then I won’t keep getting locked in the stairwell.
Most smart money is short finance long tech over the deflationary 2010s so I’m not too sure even Steve could swim against that. Bearing in mind that the profit margin on their current business exceeds the practical achievements of most retail deposit banks (in their entire histories) I think they’re better suited to selling expensive pieces of art…
Leave the financial engineering to Google… http://google.com/support/jobs/bin/answer.py?answer=159155
http://google.com/support/jobs/bin/answer.py?answer=159155
Certainly not far-fetched, but I don’t really think it would be in the Apple DNA. However, I think what it does show and with Goggle as well (Not Microsoft) is how these two companies are rising to the top of technology and will constantly be pushing and challenging one another towards some type of technological supremacy. Generating huge revenues by dominating music, search, and transaction based categories. So I guess in directly they’re both already in the financial space by printing money.
Money is the ultimate content stream.
#1 daughter keeps losing her iPhone. She needs to keep it on a chain around her neck? Not a good idea for her methinks?
But dad, she takes even less care of her bank cards.
The banking sector is unwieldy for anyone to navigate, especially those without experience in it. The sheer amount of Compliance, legal issues & Audit involved is immense and often a shock to the uninitiated.
What Jack Dorsey is doing with square is interesting much more for the payments platform than the Magstripe reader. Twitter knows how to be an Open API and unleash 3rd party apps. What they don’t know is how to navigate the Audit minefield. Security is paramount in the financial world, and often the reason their technology lags behind other sectors.
Change in the financial sector works in decades not years. If Square can succeed where PayPal almost did a decade ago, by breaking the dominance of Visa and Mastercard then we might just get Payments as easy as a Foursquare check in.
History teaches us that old Gatekeepers don’t give up power easy though.
Where does Apple fit into this? They have a tendency to build everything themselves, to a fault. Apple Video just has not taken off, while Hulu, Boxee and Youtube all threaten to leave it for dust. Apple entering the Payments sector could well produce the same result.
Somewhere between the OpenID/ OAuth discussion, Square, Paypal X & NFC is the answer. Who can put all of those jigsaw pieces together is anyone’s guess. The list of people trying is astronomical though.
Great comment, thanks Simon.