Apple’s becoming a bank by the back door

It’s been rumoured for nearly five years, but Apple looks like it is finally becoming a bank and yes, I know that most of the bankers among you reading this are now screaming at the screen shouting they aren’t, but that wasn't the feeling of a lot of the banking executives that attended last week's MarketForce OpsTechFS 2017 conference in London mirrored.

Calm it down people… two years ago I was at a Finextra event where the assembled audience listened to speakers from the usual big name banks who all announced that while they were worried about the threat to the financial services incumbents presented by GAFA (Google, Apple, Facebook and Amazon) they didn’t have the “right piece of paper,” AKA the right banking licenses.

Now, a couple of years later Facebook has its European E-Money license, and recently at Apple’s World Wide Developer’s Conference (WWDC) another of Apple’s jigsaw pieces fell into place when Tim Cook and his team unveiled Person to Person (P2P) Apple Pay.

But isn’t Apple a technology company? Yes and no – as we race towards a digital world the boundaries between previously distinct industries are eroding, and in some cases vanishing all together, increasingly Apple, as they say in the business is “building out it’s stack.”

When we talk about the Bank of Apple, let’s face it, what do you expect a bank to do? Because Apple is starting to tick a lot of the boxes, and when iOS 11 lands later this year Apple’s going to start looking more like Monzo, who bill themselves as “a new kind of bank” than the Apple of old.

Today Apple lets you make payments in shops with Apple Pay and send money to other people, but wait – what about holding on to your money? Well, here’s where things get interesting, Apple’s newest P2P announcement won’t just put money straight into your bank account, instead it’ll store it on a virtual ‘Apple Cash Card’ so you can spend it later.

That said though there are still banking like things that Apple doesn’t do – it doesn’t let you pay direct debits or standing orders, provide overdrafts or lend money, even though it does have a Barclays backed lending program if you want to borrow money to buy your new shiny iPhone…

So is Apple becoming a bank? Maybe – but by stealthily, slowly, and by the back door.

“Whether Apple’s announcement of the introduction of P2P iMessage payments and the Apple Cash Card heralds its attempts to become a bank really depends on how you define a bank,” says Chris Ward, research manager at mobile banking experts Mapa Research, “if you think of a bank in traditional terms – as an institution which you give all your money to, which many challenger banks like Monzo and Starling are trying to emulate with ‘banking’ apps – then Apple definitely isn’t a bank. Instead, Apple is piecing together services on your smartphone, like paying in shops, sending money to your friends and hanging on to spare cash, which will gradually undermine the need for traditional banks.”

Meanwhile CCS Insight’s Ben Wood agrees, “This will be a gateway to a new generation of payment and personal finance services that could, over time, help reshape traditional consumer financial services.”

So okay, bankers you can feel vilified and sit back down now. Apple might not be a bank today, tomorrow or even next year but you’d be wise to dust off your battle plans because your iPhone is  quietly starting to  manage more of our money than ever before.

Apple mortgages anyone?