Apple Banking and why it matters

Apple (most likely) will not loosen the encryption standard of its platform to remain the sole provider of a device that keeps your profile to yourself. And that includes financial services.

While I am cooking a multi-chapter post about the Russian Payment Landscape, shaped and changed by virtual cards, the flexibility of sending money and the coupling of cards and mobile phone infrastructure that even the brute force of Russian Central Bank’s push for its version of Faster Payments Scheme cannot surmount, I am still taking notes about what goes on around the world and one idea that visited me today was about Apple.

A company that once again broke record for the most profitable quarter, their ability to deliver personal devices people love to use continues for almost 13 years now, or earlier if we start with iPod.

This only highlights the formed position the company took and now defends as it x-sells additional services leveraging the original trust in a simple yet powerful mechanism to produce wishes and keep secrets.

The power of iCloud encryption and the smart logic of how Apple generate one-off keys for browsing, shopping, executing financial transactions is undenyable. It runs in parallel with the skirmish the company wages with authorities pushing it to loosen the encryption standard. Yet this is the cornerstone of so many things that allow Apple to stay a relevant and trusted party — banks included.

For years banks have only dreamed of building an end-to-end encrypted / trusted / signed channel connecting the user and the provider of services, where by means of digital delivery one could reliably confirm it is communicating with a real identifiable person.

At the same time, actions carried at the request of this person remain pseudonymous to others by default, unless otherwise mandated by the user — where indirect confirmation of identity is required, and so done by Apple.

Apple is already patenting ways to store passports and allow remote handshake for authorities to request data from users phone. One can only continue the line how this changes banking.

Exposing cards is only the beginning, where the simplicity of running payments with these representation of users creditworthiness is now supplanted by real-time checking via omni-connected mobile device.

Where Visa and MasterCard and others are investing in identity verification and payment providers that cover non-card use-cases, Apple has everything it needs to do the very same: provide a reliable and encrypted vault for other means of commerce.

Written by

10+ years, 2 labs, 1 bank, 2 startups, 1 exit. Digital banker, wishful tinkerer, amateur father. Fintech VC @gauss_vc and co-founder of @finfitapp.

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