Apple became the world’s first $1 trillion company this week and after over 20 years, the giant that at one time was nearly bankrupt is now the corporation with the most market value as well as being responsible for leading the charge to transform the technology industry into something sleeker, innovative and customer-friendly.
But is Apple an established fintech player? According to CEO Tim Cook as reported in Quartz, Apple Pay transactions have tripled since last year to more than 1 billion, thought to be more than the reported numbers for Square and PayPal mobile transactions.
The company which was formed in a garage by the two Steves and Ronald Wayne has been known to produce whatever the customer wants: from computers to music players to phones to payments, but will the technology giant do more in the financial technology sector? Or for the fintech industry?
Market value
This week, Apple became the first company to ever reach a $1 trillion valuation after a quarter of better than expected results considered to be because customers shelling out $999 for the iPhone X. After Apple shares saw a boost, the company has set aside $100 billion to buy back stock.
What this means is that Apple is worth more than all but the 15 richest countries in the world and this is the second time that a public company has been valued in the 13 digits, after PetroChina, which topped $1 trillion on the Shanghai Stock Exchange in 2007. While Cook said that the news was a “significant milestone”, it was not the “most important measure” of the corporation’s success.
The memo continued: “Financial returns are simply the result of Apple’s innovation, putting our products and customers first, and always staying true to our values.” Cook then said: “Steve [Jobs] founded Apple on the belief that the power of human creativity can solve even the biggest challenges – and that the people who are crazy enough to think they can change the world are the ones who do.” What is Apple’s most important measure of success?
Trust
Why do people continue to buy Apple products? The same reason why the majority of people are still likely to go to their high street bank to open an account rather than trying out a challenger like Monzo or Starling, even though they offer better interest rates and customer-friendly services: because of trust.
Despite being known as a company who repeatedly cuts corners on power cords and keyboards and burying subscription cancellations, consumers still turn to Apple to get the best core products. Alongside this, it seems that more and more people are feeling as if they cannot trust Apple with their data, amid the controversy around Facebook sharing user information. Will people stop using Apple Pay because of this?
Fintech
While Apple has a long history in the technology industry, its foray into finance has been short, to say the least, but it has been fruitful. When the iPhone was released in 2007, it was described as a game changer for the industry and led to the launch of Apple Pay, which harnessed the near-field communications (NFC) technology that banks had taken hold of to enable contactless payments through smartphones and other gadgets, such as watches.
Apple Pay works in terms of trust because it is as secure as contactless payments and when a card is added on to an iPhone, the details are encrypted and stored as something referred to as a device account number, or token, which means that the details are never shared during purchases.
Another level of security was added with Touch ID, Apple’s fingerprint-technology, which meant that if the iPhone was stolen, payments could be stopped by logging in to Apple’s iCloud or putting the device on ‘lost mode’ on the ‘Find My Phone’ app. However, the tech giant did away with Touch ID earlier this year as a single point of authentication on the iPhone X and welcomed Face ID.
Biometrics
Are Apple ahead of the other payment service providers because they have realized that one form of biometric security is not enough? If biometrics is the panacea everyone has been expecting to boom, will Apple’s implementation of it into products that 1 billion people currently use intensify the support for the identification technology?
What Apple has done with the introduction of Face ID is try to fix something that isn’t broken. Touch ID already revolutionized security and privacy and we all got used to the idea of your fingerprint being our password. Now, the face is a password, and Face ID is the new way to “unlock, authenticate and pay”, as Apple claims.
“With Face ID, iPhone X unlocks only when you’re looking at it. It’s also designed to protect against spoofing by photos and masks. Your Face ID information is encrypted and protected by the Secure Enclave. And it’s private – your data doesn’t leave your device and is never backed up to iCloud or anywhere else.
“Face ID uses advanced machine learning to recognize changes in your appearance. Wear a hat. Grow a beard. Put on glasses. You can even use Face ID with many types of sunglasses. So even if your friends don’t recognize you, Face ID will. For additional security, Face ID is attention aware, meaning it unlocks your iPhone X only when you look toward the device with your eyes open.
“That means Face ID can also reveal notifications and messages, keep the screen lit when you’re reading, or lower the volume of an alarm or ringer.” When the likes of Wells Fargo and MasterCard started experimenting with biometric payments, fintech professionals stated that a two-step identification process would be ideal. But do people have time for that now?
What’s more important to the consumer: quick access or secure access? When trying to make a product more user friendly, what do companies focus more on? However, while Apple Pay and other forms of digital payments are available, many still choose to use cash, debit or credit cards in the Western world. The new trend seems to be loyalty, deals and discount schemes and Apple seems to have jumped on this bandwagon too.
Apple’s Future in Fintech
Apple announced a major digital wallet promotion this week, days after the $1 trillion was revealed with some even stating that the tech giant was now a major fintech player. However, Apple does not make a lot of money from the transactions, reportedly just $0.15 per every $100 in transactions, but despite this, ensures that customers use their phones for something else.
Meanwhile, credit card companies make 1.5% to 3% for every swipe, so it would make sense for the corporation for corner the credit market, after already making significant moves in the everyday spending market. It could be said that if Apple enter the credit space, it would increase numbers of millennials using credit, something those under 30 do not seem to be doing at the moment.
