Apple transition from “own” BNPL to open finance was inevitable

Marcus challenges being a symptom of market changes – Apple had to choose – and scale while keeping the (intermediation) margins

Paylater has been on the cards for some time – and where Apple did the application scoring (to guarantee acceptance and control for top-line revenue), funding has been arranged in cooperation with Goldman Sachs’s Marcus.

Marcus that has been in turnaround after the shareholders’ revolt over the expensive and money losing retail drive – especially after the increasing rates once again brought the M&A and own-book-trading fees back – and where a strategy to scale retail trading via retail transactional channels died before reaching plateau of efficiency.

And yet Apple relies today on the solid progress of established FIs that invested in their open finance stack to respond to the concept – that Marcus planned to leverage: coupling value-added services of loans and savings to the transaction layer.

They were ready to propose to intermediating agents: wallets, aggregators, superapps – their underlying services, as Covid and negative interest rate regime brought to the fore questions on the banks branch efficiency: on the effectiveness of the last mile distribution. That catalysed the delivery of digital onboarding Apple and the respective banks are now putting to the test.

Finally, keeping a “behind the nameplate” partner would have always pitted the newcomer against the Apple product. Marcus was already threading with a cadence Apple was potentially unhappy about. Scaling the financial user cases to numerous partners might improve things.

In such arrangements, Apple keeps a sizeable share of the margin (most likely tied to usage vs just a referral fee)