The launch of the Apple Card, collaboration between Apple, Goldman Sachs and Mastercard has been met with the expected fanfare and hyperbole. But what is it offering and why should we care?
TFT asked FinTechReguLab’s Peter Smith for his insights…
The services offered by the new Apple Card have been described as “rare but not unique”, how is it going to compete in a crowded market?
It’s not completely unique, but 3 strong brands will be a big attraction & all 3 have large followers/customers who will buy the brands. They also recognise that they have separate strengths to blend. We are seeing more of this “borrow” business model with fintech collaborations now.
Consumers want more of this type of thinking – intuitive, thoughtful and creative solutions to enhance their transactions. People are looking to newer technologies to have an impact on their lives. In the past year alone, new-technology mentions on social media increased 30 percent.
Do you see the partnership of Apple, Goldman Sachs and Mastercard as a sign of things to come? What does such a union signify?
Apple are one of the great consumer brands in the world and Goldman Sachs, a prestigious institution in the financial services industry, are for the moment sticking to their customer strengths this is the first ever Mastercard Digital-First card. The technology behind it and the product itself is the first of its kind. Unlike the way in which cards have been traditionally issued, this Digital-First card will literally arrive in your digital wallet first before it arrives in your mailbox (optional).
It’s not completely unique, but 3 strong brands will be a big attraction & all 3 have large followers/customers who will buy the brands.
With features like TouchID or FaceID, it takes seconds to authenticate and is ready for the cardholder to use. This must be a sign of things to come from other brands, where fintechs have an opportunity to position their apps/ solutions.
Does the partnership spell trouble for the smaller fintechs?
No, it should provide inspiration as long as fintechs stick to their core strengths or raison d’etre. Open platforms give opportunities for api evolution across a wide number of applications or solutions/friction less interactions of convenient processes for consumers .
According to a recent study, 68 percent of those who have loaded a debit or credit card to a mobile wallet indicated they expect to make 50 percent or more of their in-store purchases using a digital wallet within two years.
At the core of both these announcements is the token services and M Chip technologies that help store the card on a digital device without exposing important details and also enable fast contactless payments – making the consumer experiences fast, simple and secure. This is a key area that other fintechs will need to focus on to compete or win consumers confidence.
As big tech moves ever closer to big finance, what measures, if any, should governments be taking?
They will encourage it, this creates open competition and fits a number of governments strategic digital plans for strong competitive fintech ecosystems and strong innovative digital economies. What we may well see is agreement to more interoperable open industry standards and best practice regulatory codes that firms have to adhere to.
Think the key here is the card’s most original feature is privacy. Apple says it won’t know where its customers have shopped, how much they paid, or what they bought. Goldman’s will use customers’ personal data to operate the card, but won’t share or sell it to third parties for marketing or advertising. Features like spend tracking and categorisation all happen using on-device intelligence, not on Apple servers. This is key & others need to look at this as possibly the new world model.
Think the key here is the card’s most original feature is privacy. Apple says it won’t know where its customers have shopped, how much they paid, or what they bought.
Apple CEO Tim Cook has stolen a march when it comes to data privacy, taking every opportunity to highlight Apple’s iPhone-centric business model, which stands out in a world where personal data fuels much of the digital economy. It could provide a selling point versus the likes of Facebook and Google which, incidentally, have their own payment services and make fewer promises about privacy.
This matters because using cash is still the most surefire way to ensure total data protection (membership), and the steady growth of digital payments has made transactions less private and more susceptible to censorship. Taken a step further, recent events like the Facebook-Cambridge Analytica scandal have demonstrated that the harvesting of personal data can pose society-level risks.