Apple’s risky bet on a possible internal financial services push
The news: We told you yesterday about Apple’s announced plans for a financial services suite dubbed “Breakout.” Today we take a look at what’s at stake for Apple and how the tech giant can implement the multi-year plan.
What this means: Breakout would make Apple a bigger player in financial services and reduce reliance on links in the future. The move also signals a greater focus on in-house products:
- The suite of financial services will help Apple is building a buy now, pay later (BNPL) program this would allow short-term loans in four instalments. It could also inform other tools, like a long-term loan program. Apple’s entry into the BNPL space would be a threat to existing vendors as it already has a strong user base that would allow it to capture a significant share of the market.
- It could also help Apple in the international expansion of its payment products. Services such as peer-to-peer payments, Apple Card and Apple Cash Card are geographically restricted as partners like Base map and Green Point focus on the United States, limiting Apple’s growth.
Will it work? Even by Apple’s standards, plans to expand in-house financial services are ambitious.
- Other Big Techs’ plans to expand into new lines of financial services have not always worked out: Meta abandoned his struggling crypto business, and google did the same with his Plex bank accounts.
- Apple will have to compete in an already cluttered payments industry. While we forecast Apple Pay will have 47.2 million users in the United States this year and 54.5 million by 2025, this push could put it up against big giants.
The big takeaway: Apple’s plans for Breakout are a calculated risk, but if it can succeed, there are three main upsides:
- New users: Apple can attract new customers with these features. New services may appeal to consumers who previously felt no need to adopt Apple Pay. This is similar to the method used by the company with its digital identification to increase Apple Pay’s user base.
- Commitment: The evasion and the supposed products could bring customers closer to iPhones, according to Bloomberg, and the payment products they offer. Apple already has a highly engaged audiencewhich he can use as a springboard to success.
- Income: A suite of proprietary technologies could be lucrative for Apple because it won’t have to share profits with partners and could open up new revenue streams. Apple Pay generates nearly $70 billion a year for the company, by Bloomberg.
Although success is not guaranteed, Apple can use its loyal customer base, vast expertise and vast resources, such as its many acquisitions—to expand its proprietary services and compete with more established financial players.