A firm that falls foul of basic financial business errors does not illicit much confidence. If it cannot look after its own affairs properly, I for one would not trust it with my money.
Then there’s the issue of companies not actually innovating. Tech giant Apple recently announced it was entering the financial services industry with a credit card. One of the big features touted by Apple was that the card would be essentially ‘informationless’ with no numbers or pins that would make it insecure. This innovation is fantastic, but it is not Apple’s; The Times newspaper reported back in September 2018 that Visa and Mastercard were both hatching plans to do the same.
The other big feature the firm promised was spending analytics, something savvy UK consumers are already very familiar with from a panoply of banking apps. So, what is Apple actually innovating? Its credit cards’ fee structures are more interesting, with essentially none to pay, other than the APR on the credit. This is where the firm could use its resources to make a difference.
Credit cards can be used effectively by people to manage short-term cash deficits and for planned purchases that get paid off on a schedule. But they can also cause a toxic spiral into debt when used recklessly or as a last resort for someone struggling financially.
Apple can truly break the mould by positioning its card as one that will never send a customer into toxic debt. In my opinion, that would be a truly novel idea and not just the gimmick it seems so far to be.
Edmund Greaves is deputy editor of Moneywise. Read more about the latest Fintech trends here.
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