Image credit: Forbes
By: Emmanuel Ilesanmi
When Apple Inc. launched its Apple Card payment system in August of 2019, little did its consumers assume that this service would translate to a more extensive development—a savings account. Fast forward to 2023, Apple now has a savings account, thanks to its continued partnership with Wall Street partner Goldman Sachs.
2023 has been a low-interest rate economy, resulting in other banking meltdowns, starting with Citibank, Silvergate Bank, and Silicon Valley Bank. The Fed’s intervention did help shut down what would have become another bank crisis. Leaving depositors alone, only depositors have therefore lost trust in the banking sector, and coupled with a persistently bearish crypto market; there needed to be more places to turn. Apple’s estimated solid user base of 2 billion active customers with a 4.15% annual percentage yield (APY) is an appealing alternative.
Like the tech space, the banking sector is difficult to break into due to stricter rules and excessive Fed control. The Apple Savings account is more of a virtual account that can hold up to $250,000 in deposits, which are insured by the FDIC, which means when there is a bank run-down, your deposits are insured. The feature, now available inside Apple’s Wallet app for all Apple Card holders in the U.S., is one of a kind, and just like how Uber broke into the taxi industry and had to be called a ride-hailing company, Apple’s saving account cannot be classified as a fintech.
The new Apple initiative looks like a scheme designed to give Apple’s new and existing customers enough reason to entrust their money in the Apple system while earning daily cash back on transactions and significant returns on savings. In a recent interview, Berkshire Hathaway CEO and Founder Warren Buffett expressed his thoughts on Apple’s breakaway solution logically. By stating:
“If you’re an Apple user and somebody offers you $10,000, but the only provision is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it.” If they tell you that if you buy another Ford car, they’ll give you $10,000 not to do that, you’ll take the $10,000 and you’ll buy a Chevy instead. It’s an incredibly valuable utility.”
He further went on to praise the current management, most especially the CEO. While some of the statements are too generous, it is expected, considering Warren Buffet holds a reasonable amount of Apple stock.
Apple’s Fintech Ecosystem
Apple has long been known to disrupt the entertainment and payment spaces and is no stranger to innovation. Its founder, Steve Jobs, ingrained this goal in 1976, when Apple was incorporated in Cupertino, California. Before the savings bank development, 2011 was Apple’s first statement in the fintech space, with the easy pay option letting customers pay for goods on their phones in its local stores without speaking to a store employee.
Apple then launched the following services: Apple TV+, Apple News+, and Apple Arcade at its launch event on March 25, 2019. And like an octopus, it has continued to spread its tentacles to cover merchants and consumers in the fintech ecosystem. The new savings bank account with an interest rate currently above the national average is no doubt keeping competitors on their toes.The development is, therefore, an intelligent move by Tim Cook to bridge its user savings problem with a high-yield savings account in a dynamic interest rate environment. However, this interest could rise or fall depending on economic forces.
According to Tim Cook, “Savings helps our users get even more value out of their favourite Apple Card benefit—Daily Cash—while providing them with an easy way to save money every day,” Jennifer Bailey, Apple’s Vice-President of Apple Pay and Apple Wallet, said in a statement. “Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly—all from one place.”
Apple controlled an estimated $800 million in 2022, a figure projected to rise with its expanding database and rich portfolio. Further progressive actions and solutions by Apple Inc. will further help solidify its stake in the fintech space.
Features of the Apple Savings Account
It is more like a flex or finesse statement that can imply that everything you touch or feel is going to be made by Apple soon. Apple is considerably making waves in keeping tech advancement upbeat. Unlike Meta, which is betting on a much distant technology, Apple is putting its money where its mouth is by observing market trends and slowly introducing solutions.
When you open a savings account, your Apple Card cash-back rewards will be transferred automatically as you earn them. However, you can choose to opt out of this. You can also transfer money from a linked bank account or your Apple Cash balance into your savings account. With no minimum deposits, minimum balance requirements, or fees on transfers, the Wallet app allows users to view their balances, withdraw funds, and deposit money up to a maximum balance of USD 250,000.
To open an account, you must be at least 18 years old, have an active Apple Card on your iPhone, a Social Security or taxpayer-identification number, be a U.S. resident with an accepted physical address, use two-factor authentication with your Apple ID, and use the most recent version of iOS.
What Does this Mean for Nigerian iPhone Users?
Savings accounts are only meant for U.S. residents at the moment. It will only be possible for Nigerians to take advantage of this service with a social security number. However, it may be possible soon if Apple considers its users’ needs outside the United States. An apple a day keeps the doctor away? Waiting for Apple to introduce its bank system to the Nigerian ecosystem will impede its growth and development.
The Nigerian ecosystem is no stranger to localized solution development. For example, a ban on Naira cards for international transactions prompted MTN, a telecom giant, to partner with Apple to allow its Nigerian users to access the Apple Music service using the MTN subscription plan. The interest rate in Nigerian bank savings accounts is lingering between the Central Bank’s approved 1.25% and 3.3% for some high-interest accounts. Nigerian-based service startups and telcos can play a key role in creating solutions to propel a high-saving consumer culture.