FinTech: Apple Wants A Bigger Slice Of The Fintech Pie
Apple’s new initiative aims to propel the company into financial services as a major force.
Bloomberg reported Wednesday on Apple’s (NASDAQ: AAPL) plans to bring more financial services in-house including developing their technology and infrastructure. An ambitious, multi-year plan would bring a number of future, fintech-like functionalities under Apple’s own roof such as payment processing, risk assessment for lending, fraud analysis, credit checks and additional customer-service functions such as the handling of disputes.
Apple’s services business already includes financial services like an Apple-branded credit card, peer-to-peer payments, the Wallet app and a mechanism for merchants to accept credit cards from an iPhone.
The company’s services revenues, which include payments, rose 24% to a record $19.5 billion during the December quarter. The gross margin on services was 72.4%.
“The growth of Apple Pay has just been stunning. It’s been absolutely stunning. And there’s still obviously a lot more there to go,” CEO Tim Cook said on the earnings call. “And because there’s still a lot of cash in the environment. And so I think that both of these and whatever else we might do have a great future ahead.”
Bloomberg has previously reported that Apple is already working on a subscription service for hardware and a “buy now, pay later” feature for Apple Pay transactions. Significantly, earlier this month, Apple acquired U.K.-based startup Credit Kudos Ltd., which uses bank data to make lending decisions.
The massively cash-rich company is also developing a payment processing system that would include functionalities such as calculating interest, rewards, approving transactions, contacting and reporting data to credit bureaus, accepting or rejecting applications based on its own risk assessments, determining and increasing credit limits, and handling transaction histories.
Financial services tied to iPhones can potentially generate income streams for Apple from interest and transaction fees, and also enable the rollout of new services to additional countries.
Related Story: Apple Acquires Mobeewave To Extend Payments Functionality
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