Apple Watch & Apple Pay

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There are plenty of places where you can read about Apple Watch, but I’d like to focus on how Apple Pay fits into FinTech world and its digital banking potential.

After the event hosted by Tim Cook, Apple Watch has been winning a lot of praise for its innovation. Despite a lot of comments out there, my personal favorite comment was David Pogue’s tweet:

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I also loved that Tim Cook said he’s been wanting something like this since he was 5 years old. But from a FinTech perspective, beyond Apple Pay, one announcement that stood out for me today was launch of Mint for the Apple Watch.

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It’s fascinating to watch an entirely new third-party software ecosystem start up literally before our eyes, with other favorites including the new Salesforce apps announced today. Details on these are available in Marc Benioff’s twitter feed.


I was in Mountain View last week at Intuit, owner of, and was impressed by recent developments, especially at the Intuit Developer Group. IDG has embraced an API and platform-centric model (see my earlier post on this topic).

With Intuit products like QuickBooks Online (QBO) and winning in the marketplace (e.g. 1M+ subscriptions for the QBO’s cloud offering) and strategy of moving from product > platform like Salesforce, I was hardly surprised to see Mint as an early partner in the nascent Apple Watch ecosystem.

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Since at both the announcement of the watch last fall, and even at today’s SF event with Tim Cook, there were not a lot of details on how Apple Pay will work with Apple Watch, it’s useful to recap what we know at this point.

According to a recent report from CNET, who caught up with Edy Cue, SVP of Apple, last week, customers have an option to lock or unlock the Apple Watch, so that you don’t have to approve each transaction on the watch.

What’s fascinating is the the way most customers can use their Apple Watch with Apple Pay by authorizing it when they put on their watch, so that they don’t need to have their iPhone with them to use it.

Seen as a clever and novel approach to authentication, as reported in GigaOM today, wearing the watch to maintain approval for the payment, means if you take off the watch (or it’s stolen), the watch recognizes this and payments will no longer work (unless you reenter passcode or pair it with iPhone).

It’s a new way of thinking about multi-factor authentication that seems natural to me. I can envision lots of digital banking innovation with Apple Watch.

Today’s news also makes it clear Apple Pay’s hardware-based (so-called “secure element” that introduces hardware based security) and tokenization of credit card info is used by both phone and watch, so you don’t need the phone to be secure.

A lot of commentators, included Benedict Evans, have said the there’s a “delight” vs. utility story to the Apple Watch, and I think that’s true, just as Apple Pay is more than a story of how to make an in-store payment.

Personally, with Apple Pay, for instance I love being able to download an app and authorize transaction using TouchID (vs. having to put in Apple ID password).

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My wife’s already asking for the Apple Sport Watch for her birthday next month (I guess I’m lucky she didn’t fall for the Apple Watch Edition).

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If you missed my post last week on the launch of Samsung Pay and Android Pay, you can read it here, however it’s striking that at last week’s World Mobile Conference in Barcelona, as many pointed out, the big banks were conspicuously absent – despite the key role of mobile to the future of banking.

I was glad to have been at Jason Calacanis’ Launch Festival last week, catching up with old friends like Adam True from Morgan Stanley. I was also glad to catch up with Emmanuel (Manny) Dounias, a private banker who focuses on tech sector.

Although there weren’t a lot of FinTech companies at Launch, the winner of the startup competition was a Bitcoin startup called Abra to help the unbanked (and those paying high fees for money transfer to developing countries).

But this week it’s all about the Apple Watch. You can read more at TechCrunch, but I suggest reading initial observations from Benedict Evans when it was announced, or reviewing AdWeek‘s summary of major brands working with Apple.

And by all means watch the keynote or ad video on Apple’s site since I think that to understand Apple Watch you have to see and experience it, rather than just read about it (so I’ll stop writing).

Apple: FinTech or Not?


Is Apple a FinTech company? Will Apple ever launch a bank? It’s an intriguing idea – Apple is rightly admired for delivering something magic to its customers through its products simplicity, usability and design.

When was the last time you used those words to describe your bank?

But, while others have speculated on the the idea of an Apple Bank (glance at this 2013 article to see a few predictions that came true), I heard a convincing story in 2014 that made me confident that Apple will not be launching a bank.

Deborah Hopkins, CEO of CitiVentures and Chief Innovation Officer for Citi, addressed a group of us from a NewCo event at CitiVentures’ offices in Palo Alto in Oct. of 2014. She told us how she had proposed, several years earlier, to create ‘white label’ bank for Apple, where Citi would provide all the back-end services, but the bank would be branded as Apple. Pretty interesting.

Apple took the proposal seriously enough to have an internal discussion, but Eddy Cue, SVP of Apple, later told Citi’s executives that while a lot of the ideas were intriguing, at the end of the day they decided: “Apple isn’t a $%*!’ing bank.”  🙂


Beyond Apple – Partnership Models for FinTech

I worked as a consultant in retail banking, consumer credit and target marketing in the UK after getting my MBA from London Business School – and ended up getting a lot of experience with affiliate marketing.

We worked for Bank of Scotland’s affiliate banking operation, which sold credit cards and loans to members of groups, such as the Automobile Association (like U.S. AAA). I also worked at Ford Credit Europe. During the same period in the late 1990’ss, in the US, a tech savvy bank Capital One, followed this model – and has often been called the “original FinTech company.”

I think that private label bank operations, where clients receive banking services from a brand that is not a bank, e.g. an airline, retailer, or even technology company (such as Apple) is that they can work, but only under very specific circumstances.

It has worked in the UK, where banks are often held in such low esteem that alternatives, like Tesco Bank (owned by a grocery chain) do well. But other popular brands – that are arguably similar to Apple – such as Virgin, launched services like Virgin Money, only to see them struggle to make them successful.  I don’t think the strategy makes sense for Apple.

But not being a bank doesn’t mean Apple isn’t a FinTech company, especially given ApplePay.


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Apple Pay

As I tweeted during it’s earnings call when it announced record (and historic) profits, CEO Tim Cook took time early on – surprisingly to me – to call out Apple Pay, giving some new metrics, and saying “2015 will be the year of ApplePay.”

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I think that’s pretty significant, even if a debate on Apple Pay continues: One of the better articles on Apple Pay came from Forbes, though you can easily find articles similar to what Re/code published, which take the opposite view.

Like the debate over iOS vs. Android, I am already getting a little tired of the current debate since its too early and key metrics aren’t available, so won’t continue the debate any further here. But I predict that it will be successful.

(Incidentally, if you’re not up to speed on what Apple Pay really means, I strongly suggest listening to Benedict Evans and Michael Copeland’s excellent podcast from Andreessen Horowitz: “Apple Takes on Payments and Your Wrist.”)

One key take away from the podcast is the importance of Apple Pay to online purchases, while the media tends to focus on its use in everyday shopping. It’s also worth reading the TechCrunch article on Apple Pay’s use in self-service situations, such as vending machines, taxis and the like (all good use cases).


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Apple Watch & Apple Pay

Turning to Apple Watch, that we learned this week will debut in April, let’s not forget a core part of its appeal is its integration with Apple Pay: “Your Wallet. Without the Wallet.”

And if you don’t have an iPhone 6, with Apple Watch you’ll be able to use Apple Pay, since it works with Apple 5 models.

I won’t to go into the chatter that’s arisen on other mobile wallets, e.g. rumors of Samsung Pay, ongoing drama over MCX and CurrentC, or the rumor of Google potentially buying the other player in NFC, Softcard.

(I’m 100% in agreement with Pete Casella, who invests in FinTech at JP Morgan Chase, who noted mobile payments seem like a potential duopoly in the US – and sees it as a crowded category for startups in the US and UK).


Is Apple is a FinTech business? To me, yes – it provides financial services technology that is relevant and making a difference – even if it’s not yet a core part of its business, and may never be one (Apple makes just 15 cents on each $100 spent using Apple Pay): It’s driving innovation in financial services through technology.

For all that it’s done for customers, its record success in its most recent quarter – and for being partnered with some of the best FinTech innovators, like Stripe, I’m incredibly excited about what Apple could do next in financial services.


I think we should follow Apple’s example by doing amazing things – as as they did in bringing security, convenience and “magic” to payments – elsewhere within financial services … and delivering from initial conception to roll out at rapid speed (based on conversations I’ve had with someone at a bank involved in launch, who said it was unlike anything they’d seen).

Innovation and speed-to-market should drive all of us in the world of FinTech – whether you’re a bank, investor or a startup.