Apple Card will let users save rewards in a high-yield Savings – Apple is building a Super App in the US

Per Apple today:

Apple today announced a new Savings account for Apple Card that will allow users to save their Daily Cash and grow their rewards in a high-yield Savings account from Goldman Sachs. In the coming months, Apple Card users will be able to open the new high-yield Savings account and have their Daily Cash automatically deposited into it — with no fees, no minimum deposits, and no minimum balance requirements. Soon, users can spend, send, and save Daily Cash directly from Wallet.

Apple Card users will be able to easily set up and manage Savings directly in their Apple Card in Wallet. Once users set up their Savings account, all future Daily Cash received will be automatically deposited into it, or they can choose to continue to have it added to an Apple Cash card in Wallet. Users can change their Daily Cash destination at any time.

To expand Savings even further, users can also deposit additional funds into their Savings account through a linked bank account, or from their Apple Cash balance. Users can also withdraw funds at any time by transferring them to a linked bank account or to their Apple Cash card, with no fees.

Apple’s savings account marks the second time Apple and Goldman Sachs tag team to launch a financial product (with Apple Pay Later, Goldman Sachs’ role will be less prominent). Apple will take care of the customer experience while the iconic bank will handle the banking side. It makes perfect sense. Who is better than Apple in crafting a great user experience on devices that they manufacture? Apple also does not have any appetite in becoming a bank. Speaking from personal experience, I can tell you that while it’s great for consumers that banking is highly regulated, such regulatory oversight and scrutiny constitute a great deal of overhead for banks.

From Goldman Sachs’ perspective, they have ambition in growing their retail banking business. First, it’s Apple Card. Then, they got the GM portfolio and are said to be launching a T-Mobile credit card soon. Goldman Sachs has the drive and tools to handle the complex and cumbersome banking regulations. However, legendary as an investment bank as Goldman Sachs is, it will have to spend a lot of money on creating a consumer-friendly image as well as on acquiring customers.

The race to book new checking and savings accounts becomes increasingly expensive. Chase rewards new qualified customers who open a new Savings account with $300. I have seen similar offers from other financial institutions. My guess is that Goldman Sachs will have to compensate Apple for every Savings account opened through the Wallet app. The freedom that Apple mandates on the product for their customers means that it will be much more difficult for Goldman Sachs to forecast the cash flow and deposits. On the other hand, whoever opens this Savings account is less likely to close any time soon and Goldman Sachs won’t have to deal with gamers (who signs up to something just for the bonus and then leaves). If there are 10 million Apple Card users in the US, Goldman Sachs could potentially sign up thousands of Savings accounts in no time, due to this partnership.

From a consumer perspective, what are the benefits? Goldman Sachs already has a Savings product with 2.35% APY. I think this new Apple’s Savings account will have a similar yield. More importantly, it is the convenience and customer experience that will be the deciding factor. Instead of going through a bank’s complex application process, users can sign up for an Apple’s Savings account on their phone. Additionally, users can move money in and out of the account seamlessly at any time and instantly. With incumbent banks, it will take several days. We should not underestimate the impact that instant gratification has on user satisfaction.

Apple is building a Super App in the US?

Here is what Apple is currently offering:

• Hardware: excluding very old models, AirPods and other headsets, all other Apple devices in the wild are capable of conducting transactions. And there are A LOT of them in the US. Whether it’s in stores or online, consumers can use their devices to make or receive a transaction
• Wallet App/Apple ID: most Apple users use one Apple ID and all information is automatically updated and synchronized across devices, provided that they are connected to Internet. In other words, transactions and rewards earned from the physical Apple Card or a Macbook will show up on an iPhone without any action from a user
• Apple Pay: arguably the most popular checkout option at counter and online on the market
• Apple Card: an Apple-branded credit card that offers 2% cash back on everything with Apple Pay as well as 3% at Apple and a few other retailers. Users can also put their Apple purchases on installments with Apple Card. Rewards from Apple Card will be automatically turned to cash in Apple Cash that can be redeemed any time
• Apple Pay Later: a new yet-to-launch BNPL service that will allow users to break a service into 4 installments with no interest or fees
• Apple Cash: a service that enables Apple users to send money to and receive money from other people. Like a digital checking account
• Apple Tap To Pay: this feature allows merchants to turn their iPhones into a payment terminal. A consumer and a merchant only need to put their iPhones close to one another and boom, the transaction is done
• Order tracking in Wallet: starting with iOS16, Apple users can track their orders right from the Wallet app

In Super Apps, I wrote:

The term Super Apps is generally credited to Mike Lazaridi, the founder of Blackberry, who defined it as “a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience”. In laymen’s terms, a Super App is an application that offers various services on one interface. While the mix of services offered by Super Apps varies from one to another, the common denominators of these apps are 1/ they are all two-sided networks popular with both merchants and consumers and 2/ they all began their journey by being excellent in one function before branching out to others. 

It all started with Apple Pay in 2014. After almost 10 years, Apple Pay is accepted at many merchants in the country and around the world. It’s in the hands of millions of consumers who own Apple devices. Now, other pieces are in place to make Wallet and Apple devices something that consumers will use every day in “a seamless, integrated, contextualized and efficient experience”. I don’t know if the Apple executive team already had this vision a decade ago, but if they did, kudos for patience, long-term vision and execution.