Apple Inc., the tech giant known for its innovative products and services, has made a spectacular entrance into the banking sector. With its new, high-yielding savings account, Apple has already attracted nearly $1 billion in deposits within the first four days of its launch, $400 million of which poured in on the launch day itself. This is significant and investors in other banks need to start taking note.
Apple and the banking Sector
The banking industry has been facing fierce competition for customer deposits, as seen with the collapse of Silicon Valley Bank, Signature Bank, and most recently, First Republic Bank (FRB). FRB alone experienced a staggering $100 billion in deposit outflows. In the midst of this turmoil that the banking sector is facing, Apple has entered the conversation and is looking like it will be a strong player in the years to come.
Boasting a jaw-dropping 1.8 billion active devices worldwide (with some users owning multiple devices), Apple now enables users to effortlessly set up and manage their savings accounts directly from Apple Card in Wallet. The account offers an impressive 4.15% yield and takes less than a minute to set up, something which will be very attractive to potential customers looking to use the bank.
With traditional banks providing an average of just ~0.5% yield, and regional banks in significant distress, Apple, led by Tim Cook, has sensed an opportunity. By offering higher-yielding savings accounts and a slick user experience, Apple joins other fintech challengers in disrupting the banking industry.
It’s clear that Apple is setting its sights on financial services; the only surprise is that it took them this long to make their move.
Apple has always ventured outside its core business
Continuing the trend of successful product launches outside of its core offerings (the products become so successful, we forget that they once did not supply them!), Apple has ventured into various sectors over the years. For instance, Apple Music has garnered millions of subscribers worldwide, providing users with seamless access to an extensive music library. Moreover, Apple TV+, the company’s streaming service, has produced critically acclaimed shows and movies, further expanding Apple’s reach in the entertainment industry.
Apple’s move into the wearables market with the Apple Watch has also proven to be a massive success. The smartwatch, equipped with fitness tracking and health monitoring features, has become a staple for many users, solidifying Apple’s position as a leader in wearable technology.
However, not every venture outside Apple’s primary product line has succeeded. The launch of Apple Maps in 2012 was met with widespread criticism due to its inaccurate data and lack of essential features. While Apple has since improved the app significantly, the initial launch was undoubtedly a disappointment. I think it is important for investors to remember that they keep going until they get it right.
Another example of a less successful endeavour is the discontinuation of the HomePod, Apple’s smart speaker. Although praised for its sound quality, the HomePod struggled to compete with more affordable alternatives like Amazon Echo and Google Home, leading to its discontinuation in 2021.
Despite these setbacks, Apple’s entry into the banking sector demonstrates the company’s willingness to take risks and explore new markets. With the impressive initial success of its high-yielding savings account, Apple has proven once again that it can make a significant impact outside of its core product offerings. As the company continues to expand its reach and challenge industry norms, the future of Apple and its influence on various sectors remains an exciting prospect.
While Apple’s move into the banking sector offers a promising alternative for those looking to maximize their savings, it’s important to note that credit card debt can severely hinder one’s personal finance and investment goals. In a previous post, we explored the growing threat of credit card debt and provided valuable tips on how to manage it effectively.