Apple has been steadily expanding its foothold in the financial services industry, with new data released by the company revealing more than 12 million users of its Apple Card credit card product, and US$10 billion in total balances in Apple Savings accounts.

In a new blog post published on January 30, 2024, Apple shares growth metrics for its Apple Card product, highlighting the popularity of the credit card among customers. Among the key data, Apple claims that:

• Apple Card has garnered 12 million users;
• In 2023, users earned over US$1 billion in Daily Cash from spending on Apple Card;
• Apple Card’s Savings accounts have reached a total of US$10 billion in deposits;
• The vast majority of users auto-deposit their Daily Cash into Savings, and nearly two-thirds of users have deposited additional funds from a linked bank account to their Savings account;
• Nearly 30% of Apple Card users making two or more payments per month;
• More than one million Apple Card users share Apple Card with their Family Sharing Group through Apple Card Family;
• Nearly 600,000 users are building credit equally with their spouses, partners, or another trusted adult on Apple Card; and
• Over 200,000 users have been approved for an Apple Card after enrolling in Path to Apple Card, a personalized program designed to improve a user’s financial health.

Several factors are contributing to the widespread popularity of the Apple Card among consumers. A key draw is the absence of fees, making the credit card particularly appealing to users seeking a cost-effective financial solution. Furthermore, the card’s focus on financial health is evident in its suite of tools within the Wallet app that facilitate easy tracking of purchases, spending management, and interest calculations, and which encourage users to avoid debt or pay it down quickly. Additionally, the card promises low interest rates and offers up to 3% Daily Cash rewards on every purchase, providing tangible benefits for regular usage.

Apple is continuously enhancing the Apple Card, an offering it launched in 2019 in collaboration with Goldman Sachs. In 2021, it introduced joint accounts under the Apple Card Family brand, allowing people to share their Apple Card, track purchases, manage spending, and build credit together with their Family Sharing group. This followed in 2023 with the launch of the Apple Savings account, a high-yield savings account for Apple Card users which currently offers a competitive 4.5% annual percentage yield.

In a recent interview with the Financial Brand, industry experts and observers noted Apple’s patient approach to financial services and willingness to experiment and invest upfront without immediate monetization.

Alex Johnson, consultant and creator of the Fintech Takes newsletter, told the online publication that because of Apple’s deep pockets and its all-inclusive strategy, the firm doesn’t have to monetize every single thing that it does. What doesn’t make money right away can still make the iPhone “better and slicker,” Johnson said.

Despite the success of its products, several observers criticized the “walled garden” concept of Apple. While the idea of an all-encompassing ecosystem and seamless integration might sound appealing to some, others like payments veteran Peter Davey argued it might lead to one-sided activities and resistance from traditional financial institutions due to fees and concerns over dealing with a non-bank tech giant.

Jason Mikula, consultant and publisher of Fintech Business Weekly, stressed that it was time for Apple to open the gate and permit other financial providers to introduce selected products and accounts. This “marketplace” could function like the App Store, he said, allowing Apple to collect fees for transactions going through that platform, enabling financial institutions to tap into a huge distribution network, and providing consumers with access to a wide and diverse range of financial solutions.

When asked about their predictions for what might come next for Apple, these experts said they envisioned a subscription management service, and identity verification solutions leveraging biometric technology, as next logical steps.

Johnson said that a centralized “command center” for managing subscriptions would align with Apple’s emphasis on customer care and financial well-being. Plus, Apple itself has diverse subscription offerings, ranging from cloud storage to Apple TV+, he added.

Mikula, meanwhile, emphasized the potential for identification services, noting that Apple is already working with a handful of states on digital drivers’ licenses through the Apple Wallet.

Apple has been operating in the finance market for less than a decade, and has already managed to gain a notable foothold. According to a 2023 report by Dutch consultancy and mergers and acquisitions advisory firm Flagship Advisory Partners, Apple controlled an estimated US$800 billion worth of payments in 2022.

About 3% of all Visa and Mastercard consumer card value and 10-12% of Visa and Mastercard card transactions in North America and Europe went through Apple Pay in 2022, Flagship Advisory Partners claims, making Apple a significant fintech player globally.

So far, Apple has relied on a slew of partners including Goldman Sachs, JP Morgan Chase as well as Visa and Mastercard, to process payments and offer Apple-branded consumer fintech products, but evidence suggest that the firm may be looking to reduce its dependency on third parties and banking partners.

In 2022, Apple established Apple Financial, a wholly-owned subsidiary dedicated to powering the firm’s Apple Pay Later service. That same year, a Bloomberg report revealed the company’s secret “Breakout” initiative that’s allegedly seeking to bring more financial services capabilities, including payment processing, risk and fraud analysis, credit checks, subscription programs for hardware purchases, and buy now, pay later (BNPL), in-house.

In November 2023, CNBC reported that Apple was looking to end its credit card and savings account partnership with Goldman Sachs within the next 12 to 15 months.

Featured image credit: Edited from Unsplash