Friday, April 21, 2023 4:08 pm2 Comments

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The question for banks and financial services companies is how worried they should be about Apple, a tech company with 1.2+ billion (and growing) iPhone users, a $2.6 trillion market cap and a history of disruptive innovation making moves into their market.

Patrick McGee and Joshua Franklin for Financial Times:

Apple’s scale makes even the world’s largest banks look little. Its services division alone, where it earns recurring subscriber revenues and App Store payments, generated $55bn in profit last year — higher than JPMorgan and Citi combined. But [services] makes up just one-fifth of its total revenues.

For JPMorgan Chase chief executive Jamie Dimon, the risk is clear enough for him to label Apple a bank. “It may not have insured deposits, but it’s a bank,” he said in June last year. “If you move money, hold money, manage money, lend money — that’s a bank.”

Dimon again warned investors of the looming threat this month, saying “large tech companies” have “enormous resources in data and proprietary systems — all of which give them an extraordinary competitive advantage”.

Stephen Squeri, chief executive of American Express, admitted to analysts on Thursday that he too is “paranoid” about Apple and Amazon, which he called “phenomenal” companies with deep links to the consumer.

“They move at the speed and force of a glacier,” says Gene Munster, managing partner of Deepwater. Commenting on Apple’s next moves in banking, he adds: “This will take five to 10 years, but by then we’ll think of Apple in the same vein as Citi, JPMorgan and Wells Fargo.”

The iPhone maker is playing a long game in finance and payments, say three former Apple employees, and its current moves are laying the technical groundwork for taking a bigger share of the market.

MacDailyNews Take: There’s no stopping Apple in fintech. The sky’s the limit.

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