Jo Howes, Commercial Director at CREALOGIX

The entry of iPhone maker Apple into the financial services space may be the first of many incursions from the world of tech giants into the market, a leading fintech executive has said.

Apple has announced plans to launch its own credit card – Apple Card – which will be available in the US this summer. The card will be accompanied by a digital app, which will provide many similar benefits and features to challenger brands like Revolut and Monzo, including stats and feedback on purchases and 2% daily cash back.

“Apple’s announcement that it is to launch its own credit card comes as no surprise to many in the banking industry,” said Jo Howes, Commercial Director at digital banking software provider CREALOGIX. “It was only going to be a matter of time before one of the major tech giants got involved in the banking sector, as challenger brands have already demonstrated that it is possible to grow quickly in this space from a standing start.”

Howes pointed out that like challenger banks, Apple has the advantage of being unburdened by legacy code or the cost of maintaining physical branches: “However, unlike fintech startups, Apple can deploy significant financial and technical resources from the very start and tap into an enormous existing customer base,” she said. “Banks need to be wary of other major tech giants following suit, and it would not be surprising if Amazon were the next tech giant to enter the banking market. In fact, a study last year showed that 65% of Amazon Prime subscribers would try a free online bank account offered by Amazon.”

Howes said established banks have an advantage over tech giants as they are already widely trusted and sustainable, something most digital challengers still need to prove to investors, customers and regulators: “Many traditional banks have been listening to customers and their evolving needs more closely, and prioritising technology and innovation in recent years, to ensure they aren’t caught out by these tech giants,” she added. “The goal now is to ensure that they continue to innovate and provide all the features and services that customers have come to expect from a modern bank account.”

by Guy Matthews