Core Competence

Core Competence

Why Apple should get into banking.

Posted Wednesday, January 21, 2009 - 5:57pm

Internet banks have, in the past, been practically willed into existence: Witness the online bank craze that emanated from Iceland, spurred by attractive interest rates. Apple doesn’t need to go overboard with financial incentives—the ease of use it promises and brand recognition it holds could be enough to tip a number of adopters its way. And it doesn’t need the bricks and mortar. As existing banks consolidate and look to shed branches and real estate, Apple can load up on servers, provide a few banking kiosks at its well-traveled Apple stores to act as showcases, and realize a cost-saving advantage over the competition.

In any case, the Apple bank doesn’t need to be huge for Apple to get rich from it. In the segmented, regionally splintered banking industry, it doesn’t take a lot of new deposits to make an impact. This would be a niche bank, taking deposits disproportionately from Apple consumers and lending for the kinds of ventures that, well, your typical Apple consumer might be undertaking: creative small business projects, distressed urban lofts, student lending, hybrid vehicles, and renewable energy (remember that Al Gore is on Apple’s board).

Apple’s branding and advertising prowess is well-known: Note its position at the top of Fortune’s "Most Admired Companies" survey in 2008, its Microsoft attack ads, or the way it snagged "most inspiring brand" plaudits in one poll. Yes, the company has its haters, and some dubious practices (like its battery-replacement and copyright-protection policies) that show it doesn’t always play well with others. But the brand still speaks and has a dedicated and growing following. So Apple’s marketing team would probably rub its hands at the prospect of making mincemeat of the likes of large and beaten-but-not-out banks like Citigroup or Bank of America.

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Submitted by NFK on Sat, 01/24/2009 - 4:45am.

More than a payment service

A payment service would make sense, and a banking license could be helpful (Paypal is a bank in Europe). Paying with your iPhone could be the next big thing. And Apple is already distributing media, a user-friendly micropayment system is the next step to overcome the limitations of iTunes and the iPhone App Store. Some newspapers would be glad. Apple could rule the world... but after that Apple should build a "Bank Store" - like the iPhone App Store" - where everyone can set up his own bank. Imagine - you could even build your own currency. There would be thousands of currencies around: green money, ethical money, religious money, corporate money, gold based money, local money, speculative money. Each currency with its own rules how to get it and how to spend it.

Submitted by jonbenson on Fri, 01/23/2009 - 7:04pm.

why just apple -- let's not forget Exxon/Mobile

If having billions in cash reserves and record profit postings is a prerequisite for becoming a bank let us not forget the big winner of 2008 -- Exxon/Mobile. And once they get the Exxon/Mobile bank setup, I say, let them bail-out GM.

Submitted by subwayguy on Fri, 01/23/2009 - 4:26pm.

[sic]

"And it’s especially outfitted today to incorporate new banking operations in its suite embrace."

Submitted by pb53 on Fri, 01/23/2009 - 3:49pm.

Ridiculous idea

What a patently absurd idea. Apple is a computer company, not a financial services one. Who cares if its "balance sheet" and "branding and advertising prowess" are great? Does it not matter that specialty is technology? Or is it first and foremost a corporation now? While we're "calling on" Company A to enter the arena of Company B, why not call on Delta Airlines to start manufacturing furniture? Or Coca-Cola to get into the business of making clothing? Maybe Paramount Pictures can start making hair products! After all, what are companies but empty money-making shells for which any widget is as good as the next, provided that it's profitable? This reminds me of a father asking his artist son, "Why don't you just become a doctor?" Let those with a vision for and passion about financial services create banks. Let Apple be what it is.

Submitted by jroane on Fri, 01/23/2009 - 3:45pm.

Apple Bank?

I had the same thought weeks ago but with a different company, Microsoft. This seems like the perfect time for cash rich companies to expand their breadth and pick up bargains in all sorts of industries. I thought of Microsoft because, like Apple, it has lots of cash on hand. Unlike Apple, the share price has been stagnant for years. And then there was that proposed deal for Yahoo, which I believe was estimated to be as much as $44 billion. For $10 billion or so, it could have bought an investment bank (Lehman or one of the other now defunct Wall Street houses), a car company (Chrysler or Saturn), an electronics retailer (Circuit City), and lots of distressed premium real estate at fire sale prices. Why do tech companies only think in tech terms and not as conglomerates, which in essence they already are?

Submitted by RevRiviera on Fri, 01/23/2009 - 3:00pm.

iBank - Excellent Idea

This would be even sweeter if the con artists masquerading as "banks" were allowed to go bankrupt as they deserve. Banks have historically been conservative, safe businesses. Ask the Rothschilds if banking is a good business. There will be huge opportunities as the economy transitions into rewarding sustainable businesses. Those businesses will be massively profitable and will require financing. Apple, Steve Jobs or not, knows how to produce products consumers love. The whole iMoniker thing works, stick with it.

Submitted by mark.mark on Fri, 01/23/2009 - 2:13pm.

Stick w/ iBank

This is an incredibly good idea. I'm not particularly fond of Apple's products...perhaps just resistant to the cultish aspects of iConsumption...but that same cult effect is perfect for a financial services company. I can see (just by length, if nothing else) that you really take this idea seriously. I hope someone at Apple is slacking off right now and reading Big Money. Oh, "Seed Bank" sounds like the kind of venerable financial institution one might find on the side of a two lane highway in rural Nebraska right in between the Sonic and the Casey's General Store. Stick with iBank.

Submitted by lastangelman on Fri, 01/23/2009 - 12:45pm.

Wrong name for the Apple bank

iBank is terrible name. The name should suggest its purpose and instill confidence. Hence, Apple, Inc.'s finance venture should be dubbed The Seed Bank . Why seed? Loans are what's needed to seed and grow the economy, perhaps start orchard after orchard of new ventures, new homes, new jobs, new careers, new lives. Also, reference to Johnny Appleseed and his legendary deeds. Also, I don't think that name is taken, yet.

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