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[ARS] Apple plans to build its own financial infrastructure for payments and lending

Maiden Voyage

Gold™ Member

Financial services will get the full Apple treatment, sources say.​


Apple plans to build its own in-house technology and infrastructure for financial services, according to a Bloomberg report citing people with knowledge of the matter.

The initiative is internally codenamed "Breakout" as an allusion to the idea of users breaking free from the current establishment players in the financial system.
Apple has long held to a philosophy of controlling as much of the user experience—and its own pipeline—as possible, believing this method offers the dual benefits of better experiences for customers and a bigger slice of the revenue pie for Apple. That control also means Apple can be less affected by surprises or failures from external partners.

That philosophy is now being thoroughly applied to financial services, a rapidly growing but relatively new part of Apple's overall product strategy. According to Bloomberg's sources, the plans would include "payment processing, risk assessment for lending, fraud analysis, credit checks, and additional customer-service functions such as the handling of disputes."

The sources add that Apple's move toward bringing all this in-house is oriented around upcoming products, not current ones. So, for example, Apple Card may still stick with Goldman Sachs.

And in some cases, like the company's planned Apple Pay Later feature, Apple might—at least at first—lean on a partner for some aspects like long-term loans while using its own tech and infrastructure for short-term loans.

Apple Pay Later was named as one of the features to which these new plans will likely apply, and Apple has other new financial products in the works, too, like a subscription service bundle for iPhones and some Apple services.
The company's growing emphasis on financial services reflects its efforts to transition from what some call a "hit-based" business—like a new iPhone or other product that may or may not generate huge demand based on various factors, some outside of Apple's control—to more consistent, recurring revenue from customers.
 

Pagusas

Elden Member
makes sense, vertically integrate everything they can, including the financial systems.

People asked in another thread "what would Apple have different from other gaming companies if they went into the gaming space?" This is the answer, an almost fully veritically intigrated company from chips/hardware, to software to app store to now financial systems. If they could breach into the space, their margins would be off the charts compared to even the closest rival in MS/Sony/Nintendo.
 
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Ron Mexico

Member
They watched Fintechs for so many years and wanted their cut of the pie.

The partnered card they did (forget the lender-- Goldman Sachs or something?) was their test balloon.

It's going to be equal parts extremely effective and gross. We've never taught the general public how to effectively manage money so let's make it easy to speedrun financial ruin.
 
so basically Apple is running their own loanshark cartel

can't wait to see the fanboys spend their life savings on iBucks only to find out they are worthless.
 
This is bollocks.

They can try to build whatever they want but will need separate regulatory authorisations across every regional jurisdiction they may wish to operate in. That's a time & money sink I doubt any these tech firms are setup to be able to solve, nor have the appetite to.

Also scale and proportionality may be considered to introduce potential systemic risks to financial stability and so there are no guarantees the regulators will actually authorise them.

Ask Facebook how Libra/Diem did on that front.
 

billyxci

Permabanned.
it's insane how much money they have. they could become a bank. apple pay/card are just the first steps. i knew they were transitioning to a services company but wasn't really expecting them to go all in with finance. they'll make insane amounts of $ but you gotta do that when their biggest cash cow (iphone) is becoming worth less. it's responsible of any business to plan for the future.

How long until Apple starts their own country.
they could've done that a long time ago tbh. they could make more than 1 country :messenger_tears_of_joy:

to put it in perspective, reading an article from a year ago when apples market cap was only $2.08t they could afford to buy any (1 or more depending on the country) country from 97% of countries (263) in existance. by this i mean apple could "buy" italy, canada, or brazil as they were the biggest countries "worth less" than apple.

of course, now apples market cap is $2.86t (+0.78t) in 2022. they could pay off 92% off the US's budget deficit (in 2021).

they could also have financed the cost of WW1, Vietnam War, or the Iraq War.
 
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IntentionalPun

Ask me about my wife's perfect butthole
This is bollocks.

They can try to build whatever they want but will need separate regulatory authorisations across every regional jurisdiction they may wish to operate in. That's a time & money sink I doubt any these tech firms are setup to be able to solve, nor have the appetite to.

Also scale and proportionality may be considered to introduce potential systemic risks to financial stability and so there are no guarantees the regulators will actually authorise them.

Ask Facebook how Libra/Diem did on that front.

Why are you using Facebook creating a system for Crypto as an example?

Completely different scenario... and You think Apple is unaware of regulation?
 

Dream-Knife

Member
it's insane how much money they have. they could become a bank. apple pay/card are just the first steps. i knew they were transitioning to a services company but wasn't really expecting them to go all in with finance. they'll make insane amounts of $ but you gotta do that when their biggest cash cow (iphone) is becoming worth less. it's responsible of any business to plan for the future.


they could've done that a long time ago tbh. they could make more than 1 country :messenger_tears_of_joy:

to put it in perspective, reading an article from a year ago when apples market cap was only $2.08t they could afford to buy any (1 or more depending on the country) country from 97% of countries (263) in existance. by this i mean apple could "buy" italy, canada, or brazil as they were the biggest countries "worth less" than apple.

of course, now apples market cap is $2.86t (+0.78t) in 2022. they could pay off 92% off the US's budget deficit (in 2021).

they could also have financed the cost of WW1, Vietnam War, or the Iraq War.
All while paying zero in taxes!
 
Very well. Will buy more stock.

I think I might, too. I think it's time to get back into the market for awhile. I have to figure out what my budget is and go from there. I want long term, for sure.
That's all I've ever went for, when playing this "game"
 

StreetsofBeige

Gold Member
it's insane how much money they have. they could become a bank. apple pay/card are just the first steps. i knew they were transitioning to a services company but wasn't really expecting them to go all in with finance. they'll make insane amounts of $ but you gotta do that when their biggest cash cow (iphone) is becoming worth less. it's responsible of any business to plan for the future.


they could've done that a long time ago tbh. they could make more than 1 country :messenger_tears_of_joy:

to put it in perspective, reading an article from a year ago when apples market cap was only $2.08t they could afford to buy any (1 or more depending on the country) country from 97% of countries (263) in existance. by this i mean apple could "buy" italy, canada, or brazil as they were the biggest countries "worth less" than apple.

of course, now apples market cap is $2.86t (+0.78t) in 2022. they could pay off 92% off the US's budget deficit (in 2021).

they could also have financed the cost of WW1, Vietnam War, or the Iraq War.
LOL. I do calculations like this too for billionaires. How much can they afford to do with their $100 billion.

Google says in 2022, New York City has an average price home price of $850,000.

At 2.86T, that can buy 3.45M homes worth $850,000 each. Assuming 2.5 people per home which is what the NYC demographic is, that's equal to 3.45M homes across 8.4M people. Wiki says NYC has 8.8M people in 2020 (not the metro area). By now it's probably around 9M. So they'll be more homes/condos now.

Regardless, Apple's market cap is worth basically all/almost all residential property in NYC.
 
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reksveks

Member
If they could breach into the space, their margins would be off the charts compared to even the closest rival in MS/Sony/Nintendo.
Pretty sure that MS margin is as good as Apple if not greater.

Primarily cause hardware isnt as big as the Microsoft revenue.

I think this might be a good move but there are some question marks about how the future of the iphone/app store looks in 3 years.
 

reksveks

Member
Well apparently Disney is it owns self serving government in Florida so may not be that far outside the realm of possibilities
Learnt about that recently cause the Republicans are threatening to recall that law and then they will have to pay for the roads and infrastructure in theory.
 
Why are you using Facebook creating a system for Crypto as an example?

Completely different scenario... and You think Apple is unaware of regulation?
Read what I wrote. Libra/Diem were trying to build a cryptocurrency, which eventually had to pivot into building a new regulated payments infrastructure (i.e. backbone for central bank issued tokenised currencies, completely obviating the basket-backed stablecoin they'd originally intended), which FB have since sold out of their interest completely because the project is almost entirely dead in a quagmire of bureaucratic red tape and likely will never see the light of day. As I said; if regulators don't trust you to build and operate (what could have quickly become due to the scale of Meta's customer base of ~1B+ users globally) a systemically important payments infrastructure with the interests of financial stability and investor protection at the core then don't expect said project to ever see authorisation ever. They'll simply keep moving the goalposts.

Whether Apple are aware of regulation or not, they are wholly unprepared and lacking in the scale of structural and human expertise, competence and operational maturity to play in the world of highly regulated financial markets infrastructure, under the international CPMI-IOSCO governing standards.
 
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Tams

Gold Member
We laugh, but it makes sense.

Even Apple know that the main business they are in is risky. There's no long term guarantee that their devices will be wanted or needed. Financial services on the other hand...

If you look at the likes of Japanese zaibatsus, or Korean chaebols, you'll find they are heavily invested in financial services.

Sony have an online bank and sell insurance (and no, not just for their products). I even have a Sony Bank bank account. They're pretty decent actually.
 

Tams

Gold Member
I would get a Sony bank account just for the name they would give.

Name: Joe

Account type: CurrencyXNXM067_Bank-MN-E-series III Standard Account Sony Plus+ 3.2
Sadly for you, they run a very clean ship. Exceptionally clean and even fair for a Japanese company.
 

Tams

Gold Member
Why would they offer one of their hot commodities that they can't even keep in stock just for opening a standard bank account? At that point, you aren't even making them money. If you deposit enough money, they do offer more benefits (as they can use the money you deposit for financial trading - like any bank).

They do offer greater rewards for buying stuff on the PlayStation store though.

Also, Japanese companies are almost always stingy compared to US companies. There's no way they'd offer as much as a PlayStation 5 that you can barely get your hands on!
 
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