Apple is transitioning from a technology company to a key player in the fintech sector, driven by its diverse financial products, strategic initiatives and use of cutting-edge technologies.

A new analysis by C-Innovation, a French fintech-focused research firm, discusses the firm’s growing role in the financial services industry, delving into its range of financial products, recent strategic moves, and potential growth driven by the adoption of artificial intelligence (AI).

Apple’s financial services ecosystem

The report, released on July 17, explores how Apple has emerged as a leading force in the financial services industry with products like Apple Pay and Apple Card. These offerings have made a substantial impact, and changed how people pay, save, invest and take on debt, effectively cementing Apple’s position as a fintech leader. They comprise:

• Apple Wallet, a mobile app launched in 2012 as Passbook that allows users to store digital documents, debit cards, and most of Apple’s financial services, and which integrates with other Apple services and devices;
• Apple Pay, a mobile payment service introduced in 2014 in the US that allows users to make convenient contactless payments with their Apple devices in physical stores, online, and within apps;
• Apple Cash, a service that enables users to send and receive money via the Messages app launched in 2017;
• Apple Card, a credit card introduced in 2019 and developed in partnership with Goldman Sachs and Mastercard that offers cashback rewards on purchases, enhanced security measures, and more;
• Apple Tap to Pay, a software point-of-sale (softPOS) solution launched in 2022 that allows merchants to accept contactless payments directly through their Apple mobile devices without needing additional hardware;
• Apple Pay Later, a service launched in 2023 that allows users to split the cost of a purchase into multiple interest-free payments; and
• Apple Savings, a high-yield savings account launched in 2023 that’s integrated with the Apple Card and which allows users to save money and earn competitive interest rates.

Apple’s fintech products have gained a notable foothold in the market. For instance, Apple Card has garnered 12 million users, and estimates by Dutch consultancy and mergers and acquisitions advisory firm Flagship Advisory Partners suggest that Apple controlled a remarkable US$800 billion worth of payments in 2022.

Recent developments and strategic moves

Recent developments, including the proposed termination of the partnership with Goldman Sachs and the shutdown of Apple Pay Later, reflects Apple’s fintech strategy moving forward. This strategy focuses on bringing more financial services in-house to gain more control and flexibility, as well as exploring global opportunities that could guarantee it more profitability and penetration, the C-Innovation report says.

In November 2023, reports surfaced that Apple was considering ending its consumer banking partnership with Goldman Sachs, sourced briefed on the matter told the Wall Street Journal. This move followed reports of Apple working on “Project Breakout,” an initiative aimed at internalizing more financial services, including those currently offered with Goldman Sachs, such as Apple Savings and Apple Card.

Additionally, Apple has shut down its buy now, pay later (BNPL) business in the US, opting instead to partner with specialist providers. This approach allows Apple to minimize its risks, while collecting fees from these partners.

Apple Pay Later was discontinued in the US in June 2024, ahead of the launch of new Apple Pay features set to hit iPhones this fall. These features will allow Apple Pay users to make purchases as well as access installment loans from credit and debit cards withing the mobile app. The service will be available in countries including Australia, Spain, the UK and the US where users will be able to apply for loans through partners including ANZ, CaixaBank, HSBC, Monzo, Citi, and Affirm.

Entering the AI era

Apple is now stepping into the AI era with its new Apple Intelligence platform and collaborations with generative AI (genAI) providers like ChatGPT. This new direction is poised to place Apple on the verge of more groundbreaking innovations, with the transformative potential of genAI presenting significant opportunities in the fintech sector, the C-Innovation report says.

In June, Apple unveiled Apple Intelligence and a partnership with OpenAI to integrate ChatGPT into the iOS operating system, opening to new interesting scenarios. Apple Intelligence is an AI platform that combines generative models with personal context to provide users with highly relevant recommendations and insights.

The technology will introduce several new capabilities relating to language tasks and image creation, among other things, and is poised to have widespread impacts across the entire Apple ecosystem, including the firm’s financial services offering, C-Innovation says.

By using the vast amount of user data that Apple has garnered over the years, the firm is poised to revolutionize the banking industry and stay at the forefront of the rapidly evolving fintech landscape, it says. Overall, C-Innovation predicts that Apple Intelligence will usher in a new era for the company where genAI plays a crucial role in personalizing and enhancing user experiences.

Featured image: edited from freepik