Is Apple becoming a bank? That’s a question that was being asked in the tech media in April after the company announced it was launching Apple Savings, it’s savings account that stole the headlines due to the high-interest rate of 4.15% it would pay on deposits.
Technically, the answer is no. Apple Savings is in partnership with Goldman Sachs, and it is the Wall Street banking firm that will hold on to your deposits. However, we do know that Apple has a keen interest in financial services. The company recently announced its Apple Pay Later – its version of BNPL (buy now pay later), and it also launched Apple Credit Card a couple of years ago. Of course, if you use an iPhone, you’ll be familiar with Apple Pay.
Google, of course, tends to mirror what Apple does, and the reverse is also true. Technically speaking, Google has already gotten into banking, launching checking accounts in partnership with several major banks. Unlike Apple, it has not moved into lines of credit, at least not yet. It also hasn’t yet moved into the BNPL craze directly, although many experts believe it is coming.
Broadly speaking, there is a consensus as to the logic of the Big Tech titans moving into payments and financial services. Google and Apple certainly aren’t alone in this respect. One of the main reasons, however, lies in the fact that each of the Big Tech firms has its own ecosystem, and it’s beneficial to keep users within that system.
Google can touch every step of an online purchase
Consider the ‘journey’ of a Google Pixel phone owner as they tried to play roulette online. They might download the casino app from the Google Play Store, or they may search online for the casino site using Google Search. When they join the casino, they may use Google Pay – or G Pay – to fund their account. Google Pay is popular in Indian online casinos, thanks to the extraordinarily high penetration rate in that country (one study showed 80% of mobile users had used G Pay). Nonetheless, Google is involved in several steps in that journey. That’s its ecosystem in action.
But we should also point out that the customer journey is one of the advantages that Big Tech holds over the traditional banking sector. These companies already hold our data, and they can thus make decisions based on our data. In short, Big Tech companies are better placed than banks to make decisions on credit. JP Morgan’s CEO Jamie Dimon recently described the (future) competition coming from Apple, Google, Amazon, and perhaps, Meta in the banking sector as “brutal”. He was clear that the data and credentials held by these firms represented an incredible advantage.
When we speak of data, we aren’t talking about Google knowing what you had for breakfast this morning. Despite our fears over what our digital footprints say about us online, remember that credit decisions can only be made with strict criteria. It is heavily regulated. However, you can also understand that using, for example, Google and Apple Pay consistently can build your credit record, and it will allow those firms to make sensible decisions before giving you a loan.
In the end, all of this is still years away from fruition. It was back in the mid-2010s when both Apple and Google made bold statements that they wanted to replace the wallet (or purse) in your pocket with their digital versions. They meant every aspect of that wallet – keys, credit cards, cash, and identification. But it’s almost certain that these recent announcements from both Apple and Google are but the first steps on the pathway to becoming bona fide financial services companies, de facto banks that hold our money and our identity.
