When Tim Cook Says Apple Will Kill Cash Bankers Should Start Worrying
Apple Pay recently rolled out to a handful of new countries and with Watch, Web and iPhone integration there are plenty of opportunites for Apple to grow the payments side of its business.
However Tim Cook revealed more aggressive ambitions for the service in an interview with Nikkei: Apple wants to kill off cash.
That's a ridiculous statement to make, taken at face value. Apple Pay is available to hardly anyone and even for those who can get it, merchants who accepted contactless payments are far from ubiquitous.
Here in Auckland cash is almost never used. The banks, the low tariff EFTPOS system for merchants and easy peer to peer payments, are all amongst the methods that local banks use to reduce friction and remove the need to carry cash.
Right now the only time I handle cash is when the tooth fairy needs to pay one of my kids a visit.
This is the cashless future I think Tim Cook is talking about. Financial transactions exclusively handled by smartphone. Apple Pay does payments but all of the other things that we do will eventually migrate there too. There's a good reason why FinTech is the next disruptor on everybody's mind at the moment.
For traditional banks there's some serious risk involved here. Imagine for a moment, if Apple were to bring its smartphone market penetration and enormous financial backing to bear on the banking industry. To become a true bank with no branches. Get paid into your iTunes Bank Account and do all your financial business from your smartphone.
Think it unlikely? How about if I told you that Sony's Financial Services division earned more than $0.5bn profit and using exactly this model has been one of the company's best performing divisions for years?
Now imagine what Apple could do in the same space. For banks and bankers - especially in territories resisting Apple Pay - this sounded like a warning shot from Tim Cook. You don't want Apple to enter your market sector.