Apple’s much anticipated high yield savings account debuted recently, featuring an impressive 4.15% annual percentage yield (APY).
As with other Apple-backed financial services, the account is very user friendly, featuring no fees, no restrictions on deposits, or minimum balance requirements. Users can set up and manage their savings account directly from Apple Card in Wallet, offering an integrated financial services experience for users. Goldman Sachs is the financial partner for both the Apple Card and savings account.
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Over the past few years, Apple has taken steady steps to strengthen its digital consumer financial services offer via the Wallet app. In addition to Apple Pay, Apple Card, and Daily Cash (Apple’s reward system for Apple card users), the Wallet app also supports transit passes, tickets, and drivers’ licenses in select states.
Last month, Apple launched Apple Pay Later, its own buy now, pay later (BNPL) financial service for digital loans. Offered via Apple Pay, users can split purchases into four payments with zero interest and no fees.
Are tech companies the new financial institutions?
While Apple’s claim that its newly launched savings account’s APY rate is more than ten times the national average is accurate, educated users will realize that there are several alternative options in the market that are backed by credit unions and other banking institutions, which offer a more competitive rate.
However, the savings account in conjunction with the OEM’s related financial products offers consumers a cohesive experience that other financial institutions cannot compete with. The service is also a valuable customer retention tool, making it less likely that users will exit an ecosystem which aids them in securing their finances, especially at a critical time of rising inflation and ongoing macroeconomic uncertainty.
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By GlobalDataThe company’s strong brand appeal also offers a semblance of security to users who might be sceptical of other high yield accounts in the market offered by lesser known/smaller financial institutions. As per its account agreement terms, Apple’s savings account insures deposits up to the standard maximum deposit amount of $250,000.
Apple’s nature is to grow
Apple’s reach into financial services also mirrors a wider trend of big tech companies such as Amazon, Meta, Google, and Uber offering financial/banking options. The new savings account will increase users’ financial engagement with the company and heighten subsequent use of related services in its portfolio to maximize returns.
A strong suite of financial products is one of the key, if not critical, components of any would-be ‘super app’ roadmap, and Apple’s strategy is to be the super app of choice for its customers. The company’s initiatives are not only expanding the applicability of mobile financial solutions, but they are also setting standards that existing and new entrants should aim to attain if they wish to remain competitive.
However, this vision is also likely to up the ante of lawmakers that are already scrutinizing the growing influence of big tech companies. To its credit, Apple is poised as a defender of consumer data privacy via ongoing initiatives such as empowering users to opt in to tracking based on the identifier for advertisers.
A continued focus on user privacy should help placate law agencies, while the company’s recent products will cement its presence in critical tech lifestyle segments that other OEMs will clamour to follow.
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Apple Inc