Update 11/30/23: This was one marriage that couldn’t pull through. Goldman Sachs and Apple may soon be parting ways, but I’m positive the Apple Card will continue. Maybe with Synchrony soon, eventually with AmEx?
Lessons From A (Rumored) Breakup
Not all partnerships work out. And that’s a good lesson here for credit unions, as well as their industry partners. I can speak to that from experience. Each relationship makes us better at ensuring future ones are more-perfect fits.
What’s really interesting, and no one is mentioning, is that this changeover will demonstrate the “Apple way” of transitioning. I can’t imagine it will be just like any other card. They (likely) instigated the split; they’ll have a user plan to transition smoothly.
Does this mean your credit union suddenly has no more digital and mega-corporation competition? No way! In fact, attention is on them even more now because Apple and news links are clickbait heaven. Thus, stories may also feature other fintech options your members can (and likely do) use.
No matter what happens with the titanium card and slick Apple Wallet platform, your credit union should still be looking to emulate its best features and user simplicity goals. I mean, that’s what people, especially your members, want.
Given that an actively-used checking account continues to be the benchmark for “PFI”, that’s probably your best place to focus future work on building revenue, loyalty, and engagement.
Original article below
Today, Apple held their seasonal keynote event, to highlight new services in a range of categories. You may get a kick out of their Apple TV+ lineup. Maybe you’re stoked about reading all your magazines on your iPhone with Apple News+.
But you’re here for Apple Pay improvements. We are talking about the banking world, right?
What is Apple Card?
It’s a “mobile-first” card, in that you do most of your spending, tracking, and reward redemptions all within the app.
The entire platform lives within the native Wallet app in your iPhone. No more downloading a banking app just to pay the credit card bill.
You can track spending by category, merchant, and even view trends. Payments are simplified, with realtime interest calculations based on what you choose to pay. And rewards deposit daily (they’re calling it Daily Cash) into your Apple Cash account (we’ve spoken about this before).
And the physical card is shiny! (It’s made out of titanium!)
Fabulous metal aside, you care about what the card offers. And is it a threat to your institution?
Spoiler: Yes. Probably.
The Apple Strategy
With more than a billion active devices, any time Apple does something, it matters. Few companies have the ability to affect the behaviors of so many so quickly. I’m not even suggesting you try.
What they did with Apple Card is look at all the pain points within the credit card realm:
- Tracking spending
- Redeeming (and understanding) rewards
- Understanding interest costs (and how to minimize)
- Getting questions answered
Then they added a bit of Apple touch to align the offering with their mission:
- Beauty (it’s subjective, sure, but the card is so pretty!)
The result is a mobile-first, simplified, and streamlined vision of a credit card.
Here’s how they addressed those pain points:
- Application: Tap to apply. Done. It automatically issues the digital version, adds it to your Wallet, and that’s it. The physical copy gets mailed.
- Tracking spending: The app color-codes spending categories, gives merchants their real logos, and uses machine learning (AI) to decrypt those obscure “IC SPEND A-MERCH 14312” charges (it was the Greek food truck, by the way). It will even show it on a map and link to it on Yelp!
- Paying/Interest: Graphical wheel that you slide your finger around to see your payments change, along with the interest accrued. Financial education with a swipe.
- Rewards: 3% at Apple, 2% using the digital version, 1% with physical card. Redeems automatically as cash every day (with notation) into your Apple Pay Cash card. Which you can spend at merchants, online, send to friends/family, and more.
- Privacy: No merchant gets any details about you on any purchase.
- Security: Every payment uses a one-time code (just like any other ApplePay transaction). Suspicious transactions appear as notifications (and can be approved or denied with a tap). A new card is sent out and no changes needed.
- Support: Using Business Chat for iMessage, customers can simply text their question to the service. A person answers and helps them out. Through their normal messaging app.
- Fees: They don’t have them. Any. At all.
Can Your Credit Union Compete?
That’s a great question. On the surface, no. You cannot create such a streamlined system with the tight integration between bank and provider.
However, all is not lost!
I’ve made a point to talk about partnering in many previous posts. It’s just as valuable (if not more so) today!
Your institution is good at the money part. You might also be great in the relationship area.
But, let’s be honest. You’re not awesome with the technology. It’s a constant effort to keep up with evolving expectations as it is, right?
That’s why you need to partner with companies who specialize in these things. My last post talked about making member communication simple. That’s one of their pain points!
Another post addressed the issues with boring transaction sheets. Am I spending too much on hummus? (The answer to this is, of course, never!)
And the most cynical/sarcastic/actually realistic answer to this question:
Sure, because it only works for members with an iPhone. Look at all those Android users you can still attract!
Mobile First = Simple First
You’ll hear a lot of talk about how “mobile first” design is essential. That making services for a computer is immediately alienating your target audience. I’m betting the firms which sell you these platforms will be climbing over each other to talk about how their stuff is so mobile first ready.
It’s not wrong. There’s a lot of value to making sure your offering is accessible from where people are.
However, I want to be clear:
Mobile First doesn’t just mean you need to make sure it works on phones.
Mobile First means that your driving strategy is:
How can we make something so simple, so intuitive, so obvious that members can do what they want in a few seconds?
Apple stepped back and saw many of the traditional challenges in credit cards. Then, they built a system (with appropriate partners) to overcome these “yucky spots”.
It’s about looking at what the real problems are, and how you can address them.
If Edison had only tried to make a brighter candle, he would never have invented the light bulb.
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Cover image credit: Apple