SCOTTSDALE, Ariz.–Another analyst has weighed in on the new Apple Card with a less-than-resounding review.
As CUToday.info reported here, the new Apple Card is to debut this summer as part of the Apple Wallet. It will include a physical card, as well. Apple CEO Tim Cook introduced the card by calling it the most “significant change in the credit card experience in 50 years.”
But not so fast, says Ron Shevlin, director of research with Cornerstone Advisors. Writing on the company’s Insight Vault blog, Shevlin says the card has already has three strikes against it, including:
The Rewards Aren’t Good Enough
“Generally speaking, successful credit cards address one of three consumer segments: Those looking for rewards, those looking for a low interest rate, or those choosing a card based on an affinity,” wrote Shevlin. “It could be argued that the Apple/GS card is an affinity play, appealing to Apple fanboys (and girls). But if that were the case, then Apple's Barclaycard would be the card of choice for many of them.
“As with other retailers' card offerings, consumers making Apple purchases are good candidates for the cards. But increasingly, they have other options to finance their purchases, like Apple's POS financing option through Citizens Bank,” Shevlin continued. “So, if it's not an affinity card, the new Apple/GS card will compete in the rewards space. Good luck with that.”
The Money Management Features Won’t Attract New Cardholders
Shevlin noted new features in the Apple Wallet app are aimed at encouraging users to pay down their credit card debt and manage their balances, as well as providing tools related to spending patterns.
“This isn't anything new,” wrote Shevlin. “And worse, few consumers use or care about these features. I'd love to see the research Apple did that makes it think these features will sway consumers' choice of cards--but I bet there isn't any.”
Apple Doesn’t Have Strong Enough Data and Analytics Capabilities
“For all the data that Apple amasses through its consumer devices, the company is not strong at marketing analytics. Apple is not a data-driven company. Google and Facebook are data-driven companies. Apple is a technology-driven company,” wrote Shevlin. “Want to know why Apple has become such an advocate for data privacy recently? It's the only way it can fight back against Amazon, Facebook, and Google. If you ascribe a more altruistic reason to the company's privacy-related proclamations, you're deceiving yourself. Unfortunately for Apple, the credit card business is a data-driven business.”
Finally, Shevlin suggested Goldman Sachs may be the key to the success of the card. Goldman Sachs has begun pushing into retail banking services with its relatively new Marcus brand, with Shevlin observing the bank has already attracted $35 billion in deposits.
Is Goldman Sachs the Key to Success for the Card?
Goldman Sachs may not have issued a credit card to date, but they had never offered a high-yield savings account before Marcus, and they're up to what, $35 billion in deposits? According to a WSJ article:
“Goldman executives hope to eventually offer Marcus loans, wealth-management services and other products to Apple customers. Without bricks-and-mortar branches, the bank spends heavily on direct mail and paid referrals to bring in customers,” said Shevlin.
Shevlin also cited a LinkedIn post by Richard Crone, CEO of Crone Consulting, who was quoted in earlier CUToday.info reporting, in which Crone asked, “What if Goldman enters behind the Apple brand as a white label service the way Discover did for Apple Pay Cash? The primary benefit to Goldman is an instant issuance platform for activating new customers in all purchase venues, online and offline, with artificial intelligence-driven customized credit options using the Apple Pay user interface."
The full post can be found here.