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Tag: mobile wallet

What’s Up With This Apple Savings Account?

Update 8/2/23: $10B in deposits. That’s it. That’s the update. Look to your mission for ways to make your credit union appealing. Because Gen Y (and Millennials, and Gen X) is fine with their iPhone doing it all.

Update 4/20/23: It’s officially here. And with a 4.15% APY, their savings has got yours rate-beat. And integration beat. And “get it on the device you already use” beat. Yet those aren’t even the important points. So let’s talk the why and how your credit union can “think different”.

This started as a LinkedIn post. However, as I kept adding explanations, it became obvious…this is an article. As an industry, credit unions need to understand what is and isn’t going on with Apple’s savings account. And what that means for all of us.

I Speak Apple

Two silhouette heads with iPhone and piggy bank inside with speech bubbles
My typical credit union conversation.

If you’ve spent any time here, follow my Twitter handle, or spoken to me, you’ll know I’m really into Apple. If you have a question about a product, historical factoid, version release schedule, or even specs, I can tell you straight from memory. (There’s even a security fix credited to me!)

Why do I share that? Because I want you to realize that I’m possibly the most qualified person in our industry to talk about the “doings of Apple”. I’ve connected Apple to credit union insights in 49 separate articles (making this one the big 5-0!).

In 2019 I claimed that Apple reinvented (improved) the credit card. Back in 2017, I started the conversation on Apple Pay Cash (now Apple Cash), their first foray into a “savings account”, and warned that they became the face of your institution for members.

Last year when Apple Music added both Lossless and Dolby Atmos to their service, I asked credit unions if they were delivering hi-res value to members. Just having music, I mean, checking accounts, was no longer enough.

When others start talking about Apple’s banking intentions, I listen. And now we’re here to clear up any misconceptions, while also highlighting the enormous challenges (and opportunities) this adds for your institution.

ApplePay & Your Credit Union

Mobile Payment Cash Exchange Future
The future of payments.

Suffice it to say, Apple is big enough that when they do something, or even just hint at it, industries react. ApplePay was introduced in 2014. By January of 2015, I was warning that it was the new standard.

If someone had a good experience with that service, they would prefer to not go backwards in technology and convenience. (“Luckily” for credit unions, it wasn’t always a good experience yet because of point-of-sale incompatibility and untrained staff. Not anymore.)

At the time, I was impressed by how fast many credit unions stepped up and made their cards ApplePay compatible. In some ways, it was laying the groundwork for handing your member’s PFI over to someone else (that’s just a nod to the cleverness of Apple’s slow, deliberate, and integrated approach to things), but, ah well.

Despite these risks, ensuring your cards can be added to mobile wallets is necessary.

The Apple Savings Account (it’s just Savings) has both nothing and everything to do with this history.

Savings. By Apple.

Innovation - Mindshare - Profits: This is the (Apple) Way
This is the way.

A recent article in CUToday implores credit union executives to “pay attention” to Apple’s banking intentions. It has many great points about the merging of savings and checking accounts, the ease of digital account opening, instantaneous access to rewards, and more.

“[I]t’s the full spectrum,” Richard Crone explains. He’s right. Apple strategically creates products and services which start out as separate initiatives, but then slowly (and sometimes unnoticed) merge together. Before you know it, they just took over an industry.

Apple plays the long game, and their end-goal isn’t market domination. It’s mindshare. With a huge profit margin no one else can match. While other companies sell far more phones, Apple rakes in over 90% of the profits for the entire industry. Can you name 5 other smartphones?

You can bet this is their approach to banking, too.

The Pre and Post Apple Effect

Old and New Computers - Before and After Apple
Remember boring beige computers?

Apple also redefines traditional categories. There were computers, but then came the Macintosh. There were music players, but then arrived the iPod. We had plenty of smartphones, but we didn’t have an iPhone.

AirPods revolutionized what we thought headphones could be. The Apple Watch made a smartwatch practical, fun, and a crucial tool in monitoring and improving your health.

Now take a step back: All of these products complement each other, with subscription services to overlay. AirPods auto-switch between every Apple device you own. iCloud+ (starting at $0.99/month) links data from Apple TV (have you tried AppleTV+?) to your Mac, while adding privacy protection and more.

Apple Wallet is their “life” hub. It’s a banking app, but it’s also a platform, where you can access cards from other institutions, including your credit union, plus employee badges, mass transit passes, Disney World Magic Bands, even your car keys and ID.

And you just noticed that Apple is slowly replacing your physical wallet. No way you’ll go anywhere without your iDevices now!

Plus, did you know that your iPhone can be a merchant payment terminal? Yep, with Tap to Pay on iPhone, you can accept purchases by letting people tap their card, watch, or phone to yours.

Does that work with your business services? It does with Square. And I’ll give you one guess which app manages all that…yes, it’s Wallet. The same place you can deposit those funds into Savings, or pay for something yourself with the Apple Card.

Quietly, Apple has walked into the payment, savings, and budgeting space, from both the consumer and merchant perspectives. Innovation, mindshare, profit.

Apple & Your Credit Union: Bringing Clarity

Magnifying Glass on Crystal
Crystal-clear. Because it’s a crys…

There are a lot of similar-sounding services, platforms, and even physical cards. So let’s clear up any misconceptions (including in that above-linked article):

  1. When this article was originally written, it had yet to launch. Now, as of 4/17/23, it’s available to sign up (in less than a minute). Compare that to adding new accounts for members at your institution.
  2. Apple’s savings account will be limited (initially) to users of the Apple Card, which is credit. Can’t qualify for the credit card? You don’t get a savings account. This will likely evolve over time, but for now, they want the tie-in, which makes sense.
  3. To be clear, Apple isn’t a bank. These accounts and services are through a partnership with Goldman Sachs. This should remind you of a past article. There’s more, but that’s for the next section.
  4. A lot of different and related services are mentioned.
    1. ApplePay is the platform that lets you digitize debit and credit cards (like the ones at your #creditunion) and use them from your iPhone, iPad, Mac, or Watch.
    2. Apple Cash (formerly called Apple Pay Cash) is the virtual account powered by Discover and Green Dot Bank where your Daily Cash (rewards) go.
    3. Wallet is the app, but also the platform, and it requires an iPhone.
  5. “Supporting” Apple Wallet at your credit union should already be done and just lets members pay with your cards through their iDevices. This has absolutely nothing to do with their savings account or the Apple Card. Consider this your lifeline to digital audiences, nothing more.

Even more simplified:

  • Apple Savings. A huge threat to your debit usage.
  • Apple Card. A credit card that makes yours look old.

Digital, Sure. Also, App-Based.

Wallet App - Cards and Keys
There’s an app for that. Wallet.

All of this, of course, works through a single app, Wallet. As Crone explained, “the enrollment happens online”. In fact, everything happens digitally, on a single screen. When credit unions talk about simplifying applications or streamlining account openings, it has to be this easy.

You can’t do it alone. And that’s ok. I’ve discussed how to address this before. My company even has some ideas.

To Succeed: Be A Credit Union

Diverse People and Heart
You know this part.

Bottom line: You can’t beat Apple at their own game.

But that’s ok, because offering credit cards and checking/savings accounts has never just been what your credit union is about…right?

Compete by living your mission.

Earn loyalty by standing up for members.

Keep it simple by offering the best available digital services.

Market the difference, not the similarities.

Apple and other companies will continue to innovate simplicity and creep into more industries. The path for survival, and potentially even great success, is in knowing your why. Remember, Apple doesn’t need to be the first, nor the largest. They just want to be the best for their customers.

And isn’t that a pretty credit union-esque thing to be?

Apple Reinvents (Improves?) the Credit Card

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?

In the most simple terms, Apple introduced a credit card. They’re calling it Apple Card. (PS – They partnered with Goldman Sachs. Remember talking about that?)

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.

Apple Card - Physical
Titanium. Seriously. (And no numbers to get stolen!)

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:

  • Applying
  • Tracking spending
  • Paying
  • 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:

  • Privacy
  • Security
  • 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?

Group of People Casually Talking in Office Space

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

Mobile Banking Phone App and Bank Statue

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”.

Edison Bulbs Hanging from Ceiling

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.

To help illuminate (pun actually not intended, but enjoyed) your best path forward, I encourage you to Subscribe to my blog.

Cover image credit: Apple

Give Your Card A Security Update

Originally published on CUInsight.com

Update 7/12/16: An earlier version of this article claimed Samsung Pay did not use tokenization. They do, my mistake! Corrected. (CUInsight version not updated)

A family friend was in town this past week. She is part of the Boomer generation, so, a user of new tech, but semi-begrudgingly. At one point, we discussed how her Android phone supported mobile payment. “It’s easier and more secure for you!” I explained to her. “You’ll never need to go through the hassle of getting a new card number again!” Her response? “Yeah, still wouldn’t bother. I’d prefer to just swipe.”

This is the type of apathy you’re facing. She didn’t grow up in a world of data security breaches, and considers a reissued credit card “par for the course”. It’s not that she doesn’t believe me when I tell her that mobile payment is vastly better. She just doesn’t care.

Maybe I framed it wrong. As we all have, using terms like tokenization instead of just calling it what it is: A security update for your credit card. So what is tokenization (To-Ken-I-Zeh-Shun)? Besides a big, scary word, of course. It’s always thrown around when mobile payments are discussed, but a recent survey shows understanding is lacking.

Nearly a third of people admit to not knowing what it means and almost half say that it wouldn’t encourage them to use mobile payments. My interpretation: That latter group doesn’t grasp what it is either, but are afraid to admit it.

In reality, it doesn’t matter if people know the term, because the benefits work regardless. That said, I’m all about clarity, so here’s an explanation!

So, what is it and why should you care? Tokenization represents how your card number is handled during the transaction. Still fuzzy? That’s ok.

Here’s how a normal purchase works (greatly simplified and leaving out payment processor):

1. Swipe at terminal (or type number on computer).
2. The number on the front of your card goes to the merchant.
3. Merchant asks credit card issuer (your credit union or bank) if the number is good.
4. Bank or credit union looks at number and gives a “yay or nay”.
5. Merchant keeps your name and card number so they know who you are when you buy again.

As you can see, the number on your card passes through multiple hands, and even stays with some. While your financial institution guards the number, others along the line may not. This is how major breaches occur. Bad actors break into these non-bank systems and steal the list of names and numbers, then sell them on the black market. Sometimes they lie in wait, gathering new numbers for months before anyone even notices. Then, the numbers are sold or posted online, and that’s when your frustrations begin.

Here’s how a tokenized mobile payment works:

1. When you add a card to your phone’s “wallet”, it asks your bank or credit union to verify your identity.
2. Your issuer then creates a new number just for mobile payments (which you never see).
3. Upon paying with your phone, a fingerprint is required to show it’s really you.
4. The phone then uses your “mobile payment” number to make another one-time-use number and sends that to the merchant.
5. The merchant asks your bank or credit union if this number is good, but learns nothing from it, since it will never be used again.

The number on your card never leaves your possession. Best part of this? If every one of those systems was hacked, your card number would still be safe. The issuer just makes a new “mobile payment” number for you, and that’s it. No canceling accounts, changing numbers, or mailing cards. In fact, it might happen without you ever knowing. Think of it like a security update for your credit card.

Tokenization isn’t scary. Swiping your card the old way is. Your credit union put a lot of work into supporting the mobile payment systems…growth will remain stagnant if only 1/4 see the value. Help your members live a safer financial life and spread the knowledge!

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