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DMH - the techpreneur

David Murray-Hundley

Could Apple challenge the high street banks

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If Google or Apple did move into this space, imagine the up take based purely on trust and loyalty

“We will never buy online"

“You won’t catch me using my credit card on the internet” 

“How safe is my information online?”

These phrases were once commonplace in the b2b and b2c space. In fact, they are still common in the b2c space, but confidence in the consumer market is improving.

Building trust is the key to success in the payments market. At the end of the day, you are dealing with private information, information about the consumer or businesses and, at some point very soon, people’s wallets.

This past year, I have been working on a stealth company looking at the multiple wallet space, as well as marketing campaigns for merchants and how to create standards in the whole card space.

One of the things I have noticed, is that companies are trying to cover the whole mobile payments space at once and not looking to build confidence and deal with challenges from the early B2B, B2C era. I have a view that Apple, with their passbook technology, have the opportunity to create the ‘iTunes Bank’ or virtual mall.

I also think Apple has been able to take its time to build user trust, with 225 million iTune accounts each paired-up with a credit or debit card. That’s a Bank of Apple in itself and has amazing potential. Building users’ confidence in using their phones to scan passes etc. though is all about convincing them that this is both safe and has value to them individually.

Apple also have the chance to guide and educate users through the new process of using passes. They can then look at options to expand into new apps for payments.

Apple will spend time and money looking into unique, real time QR codes linked to one particular transaction, in order to eliminate any security issues. No doubt their plans are being able to offer payments via your Apple ID without exposing any credit card numbers, private information, all from your mobile.

There is still some way for Apple to go to make a model that works both for them and the consumer, not least, they would not want to carry out transactions for free, so any fee charged per transaction would be on top of the fee charged by credit cards and payment partners, making it more expensive.

Unless, and this comes back to trust, Apple required a direct connection to your bank account to enable your Apple ID for direct payments. This would be a hard sell, but it would be making that pitch to people who have already trusted credit cards to it for some time, so it's not as outlandish as you think.

My question is at this time though, even if we already trust vendors with our details, are we truly ready for mobile payments? Right now, I am not sure we are, but ‘now’ in the technology world we live in, can change so very, very quickly and the early days of PayPal is a good example, yet we all, myself included still moan about the fees.

Just look at the success rate for NFC for Google and other vendors that have tried to make this happen.

Apple is uniquely positioned to take its current cachet with regards to credit cards and build on that through the redemption of passes and giftcards through Passbook. Thus breaking the trust threshold.

What’s quite smart about Passbook, is that it doesn’t exclude companies such as Wrapp, Square or Dropgift from taking advantage of the functionality. These vendors could easily offer a card outside of their own mobile application or allow shops to redeem codes from a Passbook Pass.

So trying to look into a crystal ball a bit, if I look at Apple’s client base, the majority are a pretty tech savvy bunch with, I am guessing, a fairly high percentage that bank online and also use a mobile to bank online. So it makes you wonder how many would easily embrace a bank service started by Apple, knowing that the same brand dealt with other factors such as UI and user friendliness well. I seem to remember high street banks at one time having people banking with them from 18-80 years old, because of factors that brought loyalty. Not today!

Apple have probably thought about moving into financial services, but then if someone had written a column on Apple back in 1985, who would have thought Apple would end up massive in the digital music space or mobile phones.

If Google or Apple did move into this space, imagine the up take from day one, based purely on the trust and loyalty that they would get. It would certainly make a few of the traditional institutes take notice and I think an Apple iBank could be a force to reckon with. Maybe that’s a 2015 prediction.

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