Following Apple announcement it will start to issue credit cards, one might ask if the will be successful in this crowded arena of credit card.
In fact, Apple has many ingredients to succeed: a powerful established & trusted brand, digital prowess, an organization and product focused on the customer experience, access to hundreds of millions customers, an attractive pricing and rewards proposal, an eco-system…
I shortly describe each of them below.
A trusted brand
In a recent survey performed by Bain&Co, Apple ranked 3rd amongst the tech companies consumers are most likely to trust with their money (and Google 4th, so yes Google will probably come with a proposal too). Another aspect to consider is that emotionally connected customers (and who knows how some Apple Fan are), are more valuable to a brand and tend to use more of its products. Finally, we shouldn’t underestimate the « Apple » attractiveness to the young generation who is more likely to take financial product from digital giants and new players.
They are the first to launch a digital only card with things other can’t do like signing up on your iPhone and start using it right away, anywhere in the world. By doing so, they fulfill what consumers expect today : simple, easy to use and convenient digital channels.
Focus on UX
Most financial institutions lag really behind on this matter, their products and services design and offering are not oriented around customers’ needs. Reversely, UX by design is embedded in all what Apple puts on the market, and this card is no exception. With this digital card, Apple takes customer experience to a new level with great features such as immediate issuance, top-notched rewards program, mobile payment, P2P, expenses categorization, PFM features, …
100s Millions customers
In the US only, Apple has more than 100M smartphone customers. And though starting with the US, Apple has a worldwide view with an installed smartphone base above 900M (out of +1.4B active Apple devices). So the addressable market is huge (and at a low acquisition cost). Even if the take up is reaching a mere 10%, this would make Apple one of the largest issuer in the world.
An attractive pricing and rewards proposal
Their pricing is attractive compared to the US market – no annual, late, international or over-the-limit fees and interest rates are “among the lowest in the industry”. And the rewards program is quite strong too : 3% on Apple products and services, 2% on all spending with Apple Pay and 1% with the physical card.
With its strong hardware base, we now see a bold shift towards services. Apple is creating an interconnected eco-system where they will be providing fast and personalized services and offers (TV, News, Gaming, Music, …). And the card will play an important aspect: it will act as the glue.
It is probably a matter of (short) time before digital giants get successful in penetrating Financial services.
Luc Gillain – Partner.