A savings account with an annual interest rate of 4.15% will be created on the iPhone. Apple has teamed up with global investment bank Goldman Sachs to introduce a savings account product that is 10 times higher than the average deposit interest rate in the United States for the first time in the United States. As Apple, which has already dominated the US digital pay (offline simple payment) market, expanded its business from credit card and installment services to deposit reception, competition between big tech (tech giants) and the traditional banking industry is said to be in full swing. In particular, concerns are spreading that small and medium-sized regional banks, which lost billions of dollars in deposits due to the bankruptcy of Silicon Valley Bank (SVB), could become victims of Apple’s ‘deposit sweep’. Apple did not say whether it would launch the savings service in other regions, including Korea.
Apple announced on the 17th (local time) that it will start a savings account service for US Apple Card users. You can save up to $250,000 (about 300 million won), which is the deposit protection limit. The deposit is managed by Goldman Sachs, Apple’s financial partner.
Apple’s promised annual interest rate of 4.15% is 10 times higher than the US average interest rate of 0.37% and higher than Goldman Sachs’ digital banking brand ‘Marcus’ interest rate of 3.9%. According to CNN, Apple’s savings account interest rate ranks 11th among thousands of banks nationwide. However, Apple has no conditions such as account opening fees, minimum deposit standards, and one-year deposit standards, and it is evaluated that it is an exceptional condition because it allows you to deposit and withdraw freely.
Apple, which released the digital wallet ‘Apple Wallet’ in 2012, is expanding financial services such as mobile payment ‘Apple Pay’ (2014), personal remittance service ‘Apple Cash’ (2017), and credit card ‘Apple Card’ (2019). there is. In particular, Apple Card is a cashback service that returns up to 3% of the amount spent without a fee, and the number of users increased to 67 million as of the beginning of last year.
Entering this year, it entered the short-term loan market by launching the ‘Apple Pay Latter’, which enables installment payments by paying in advance and paying later. It is known that Apple is also preparing a long-term loan product called ‘Apple Pay Monthly Payment’. In effect, it turns into an ‘iPhone bank’.
According to Bloomberg News, Apple’s sales of services such as Apple TV and Apple Fitness, including financial products, have soared, accounting for up to 20% of its total sales.
The U.S. banking sector is nervous about Apple’s aggressive financial service moves. Even before the SVB crisis, in the aftermath of an intense interest rate hike by the US central bank, the Federal Reserve System (Fed), banks have been struggling with depositors leaving for money market funds (MMF), a cash equivalent investment product with higher interest rates. Since March of last year, about 800 billion dollars (about 1054 trillion won) have been withdrawn from all US bank accounts for one year.
The SVB crisis accelerated the departure of depositors. Only three banks, Charles Schwab, State Street, and M&T, which announced their results on the 17th, withdrew about 60 billion dollars (about 79 trillion won) in the first quarter of this year (January-March). U.S. small and medium-sized regional banks are competing with not only MMF and large banks but also Apple for the deposit holders who have started to migrate following the high interest rates. Digital Pay Another powerhouse, PayPal, also operates savings accounts, with an interest rate of 4.15%.
Larry Fink, CEO of BlackRock, the world’s largest asset management company, recently warned that “traditional financial institution’s deposit withdrawal will continue to become visible.”
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.