Traditional banks have been offering close to 0% interest on savings accounts for years, leaving consumers searching for better alternatives. As the demand for digital banking grows, tech giant Apple is stepping in to capitalize on this trend, offering both a seamless user experience and a competitive interest rate of 4.15%. The company’s move into the banking sector threatens to disrupt the traditional banking landscape and accelerate the shift toward tech-based banking solutions.
According to a recent Twitter thread by The Kobeissi Letter, the largest banks in the US have provided disappointing savings rates, and when questioned about these low rates, the most common response from these institutions was that they offered a “better user experience.” However, with Apple, the world’s leader in creating user-friendly products and services, entering the market, traditional banks will face stiff competition in this arena.
There are currently over two billion active Apple devices in use globally, which the company can leverage to create an even more seamless banking experience for its customers. The Kobeissi Letter notes that by 2025, more than 80% of people who use banks are expected to be utilizing digital banking, a trend that was significantly accelerated by the COVID-19 pandemic. This positions Apple and other tech giants perfectly to capture a large share of the market.
Moreover, younger generations are much less likely to view in-person banking as essential. The Kobeissi Letter shares that 58% of people over 50 view having a local branch as important, compared to just 48% of people under 30. A significant 33% of people under 30 are neutral about the topic, while 19% view it as unimportant. When looking at the breakdown of those who use in-person banking services, the trend stands out even more: just 4.8% of people aged 25 to 34 primarily use in-person banking services, compared to 30.5% of those aged 65 and above. This generational shift indicates that the future of banking is digital and tech-oriented.
Adding to the traditional banking sector’s woes is its struggle to maintain deposit levels. The Kobeissi Letter highlights that over the last year, total bank deposits in the US have fallen by $1 trillion. The combination of rapidly rising interest rates and high inflation has driven money away from banks, as people seek a return on their capital.
The convergence of these factors presents a clear opportunity for Apple and other tech companies to transform the banking industry. Customers increasingly desire tech-based banking solutions that offer higher interest rates and a seamless user experience. Apple, with its vast network and engineering expertise, is well-positioned to cater to these needs.
As the banking landscape undergoes a significant shift, traditional banks must adapt or risk losing customers to more innovative, tech-focused competitors. Apple’s entrance into the market serves as a warning to traditional banks to improve their offerings and adapt to the evolving needs and preferences of their customers.
Stay tuned for more developments on this story as it unfolds, and follow The Kobeissi Letter for the latest insights into the world of finance and technology.