Apple (NASDAQ:AAPL) has revealed that the number of Apple Card holders now numbers over 12 million since its launch in 2019. Apple partners with Goldman Sachs (NYSE:GS) to provide the Fintech services.
At the same time, in the past several days, Apple moved its Apple Savings interest rate to 4.50% as it moves to increase the number of users holding the Apple Card (which is required to access Apple Savings) and become more competitive to other savings providers.
In a release, Apple’s vice president of Apple Pay and Apple Wallet, Jennifer Bailey, said it was rewarding to see 12 million customers using the Apple Card.
“We’re proud of what we’ve been able to deliver to Apple Card customers in just five years. As we look at the year ahead and beyond, we’re excited to continue to innovate and invest in Apple Card’s award-winning experience, and provide users with more tools and features that help them lead healthier financial lives.”
Goldman Sachs’s CEO of Enterprise Partnerships in Platform Solutions, Bill Johnson, commented too – adding they are pleased with the customer response to the Apple Card.
“We are committed to continuing to deliver an excellent experience for Apple Card customers.”
The above statement is notable as it has been reported that Goldman was unhappy with the agreement with Apple, and expectations were for Apple to find another partner (or maybe for the company to acquire a chartered bank). Goldman has been scaling back on its Fintech ambitions in recent quarters to focus more on wheelhouse operations. The statement appears to indicate that Goldman may stick around a while longer to power Apple Card (and perhaps other future services). Perhaps the two partners tweaked the agreement to make it more appealing for Goldman. One of the points of friction was said to be that Apple Card holders were better customers, paying off or down balances faster than normal, meaning less revenue for Apple/Goldman. That appears to be more of an opportunity to me as better customers can be sold more services with less risk, it would seem.
Apple touted the digital features of Apple Card, noting that daily cashback generated $1 billion for its users while benefit from enhanced security features.
Deposits in Apple Savings now surpass $10 billion – easily topping long-established Fintech LendingClub, which just reported Q4 results. The Daily Cash feature automatically deposits the money into Apple Savings if the user has enabled the feature.
Apple Card incorporates a family feature – similar to its other services like Apple TV, etc. – sharing now tops 1 million, and over 600,000 users are “building credit.” This means an Apple Cardholder can digitally enable a family member (or someone else) to use the digital card and receive a physical one (if they want). The main cardholder can see expenditures and can cap the amount of any charge. The sharing feature allows the family members to build a credit file, which can be important for younger individuals.
There are two really big opportunities for Apple regarding its digital wallet and card. First, to seamlessly offer additional services: Think investing in stocks, ETFs, etc. Apple already offers credit with a BNPL service that is expected to be extended to longer-term loans later this year. It was previously reported that Apple was planning an investing service before the market tanked.
Second, Apple Card is limited to the US – this means the rest of the world is ripe for expansion – first starting with developed countries where assessing and offering credit will be easier.
Apple is quickly becoming a Fintech powerhouse challenging more established Fintechs as well as traditional banks. From one perspective, it is the largest Fintech in the world with more than a billion people using its products like the iPhone. This means the entrenched user base is an enormous opportunity that Apple will benefit from – over time. As the saying goes, the world needs banking services – they just don’t necessarily need Banks. Welcome to the Bank of Apple.
Apple reports its Q1 earnings results (October-December 2023) after markets close tomorrow (Thursday, February 1, 2024)