Apple, the largest company in the world by market capitalization, is sitting pretty with $98 billion in cash. And now there is speculation the tech giant may use that cash to enter the banking business. Could we expect consumers to camp out for an ‘iBank’ account?

Anders Carlsson / Flickr source

According to a survey by KAE and Toluna of more than 5,000 respondents in the U.S. and England, 1 in 10 people would consider banking with Apple and 43 percent of current Apple customers would make it their primary bank.

“With a proven ability to cross-sell additional products, along with the highest sales per square foot of any retailer and an affluent customer base, it wouldn’t take long for Apple to become one of the most profitable consumer banks in recent times,” said David Rankin, managing director at KAE, in a prepared statement.

Stamped on the most popular consumer gadgets including notebooks, tablets and smartphones, the Apple brand is consumer-oriented, minimalistic and simple — traits that have fostered a cult-like love among consumers. Few tech companies can brag of loyal customers who pitch tents days ahead of a product launch — Apple is definitely one of them.

“The strength of Apple’s relationship with consumers is a result of its ability to redefine the terms of competition in an industry and design emotionally rich ‘human experiences,” said Lee Powney, chief commercial officer at KAE, in prepared remarks.

A savior to banking?

At first glance, the banking industry may not seem appropriate for Apple. The industry has an awful reputation. Banks are vilified for engaging in unscrupulous practices and and causing the Great Recession.

But Apple has already proven it can transform markets. The iPhone sparked the widespread adoption of smartphones and the iPad gave birth to the tablet-computer market. With a bank, the Apple brand could renew trust in the industry.

Apples customers already have iTunes accounts that can be loaded with funds to purchase movies, TV shows, music and mobile applications. Combine that with future NFC-enabled hardware from Apple, the company has an attractive mobile payments system. Apple already allows customers to pay for in-store purchases with their iTunes account via a mobile app.

“This research tells us Apple customers perceive a fit where at first glance we would assume the brand could not travel,” Powney added. “It would be very ‘un-Apple’ to simply enter into a market without changing the terms of competition.”

Apple did not reply to a request for comment.

Making it work

Applying for a bank charter in the U.S. is a lengthy and tedious procedure and it would subject Apple to a plenty of regulatory oversight. It may be easier to just buy an existing bank, which shouldn’t be a big problem due to the company’s monstrous cash reserve. But, it would still need approval by federal regulators.

Just because of its name, New York-based Apple Bank of Savings is just asking to be acquired by the tech giant.

But, Simple (formerly BankSimple) is a financial startup with a philosophy that is more aligned with Apple’s brand. Simple, which designs banking interfaces, but does not hold customer deposits, aims to bring clarity and technological sophistication to banking.

Such a purchase may introduce a popular Apple motto to the banking industry: “It just works”.

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  • Never gonna happen. No way on earth would Apple ever expose its brand to the consumer bile inherent in banking. The last thing Apple wants to see is all the love turn to hate, no matter how much money may be on the table. Apple only dabbles in industries that manufacture sexy things people want, not icky things people need.

    Keep in mind, in the financial industry, there is a huge difference between a company that facilitates payments (like Amex or PayPal) and true banking providers (who offer CDs, loans, credit cards).

    • Alex Matjanec

      While I agree Apple becoming a bank is a long shot, your second comment around separating payments and banking does present additional possibilities. 

      If Apple does choose to enter the payments space, beyond Music, Movies and Apps, the disruption could cause people to become even more disconnected from their banks with regards to payments. 

      This is certainly what the prepaid market is hoping for. The more you don’t have to pull out the plastic, the more you start to care less where you money is being held…at least for payments.

  • Huh?

    How could Apple possibly become a bank? The bank holding company act restricts activities to those incidental to the business of banking. Manufacturing consumer products certainly does not fall within the business of banking. Perhaps Apple could acquirer a limited purpose bank (e.g. industrial bank or credit card bank to sell products on credit)… but with the Dodd-Frank moratorium on such acquistitions or new charters, it seems highly unlikely!!