This article identifies the next move by Apple to lock banks out of its market by restricting access to core features on Apple devices. This “walled garden” approach to market penetration has helped Apple lock out competitors and generate greater profit.
While the article focuses on the banking features that Apple will make available through its relationship with Goldman Sachs, the real news is that Apple has added identity to its walled garden. Apple has enabled the Goldman Sachs onboarding process by utilizing Apple’s control of the user’s identity:
“This quick strike comes through Apple Card’s unusual application and activation process. Consumers can apply for the card at any time by opening an app that comes pre-installed on their phone. If they request the physical card, they never have to call an 800 number to activate it; instead, they simply tap the card’s packaging on the phone. It’s a decidedly different process — but also very familiar to any consumers who ever paired Apple’s Airpods to an iPhone.”
The payment networks have identified identity as a critical component of not only payment fraud but also the larger issue of identity. Mastercard has released its consumer-centric model for digital identity, and Microsoft and IBM are supporting development of a self-sovereign identity in the Linux Hyperledger Indy project. But how will IBM, Mastercard, Microsoft, or anyone else initiate its own consumer-centric digital identity model if the consumer’s identity is already locked up tight inside the Apple ecosystem?
Because Apple controls all aspects of its ecosystem, a fanatical control issue that has served the company well since its creation, it will be able to implement control over its customer’s identities very quickly and then monetize that control. This is evident in the solution it deployed with Goldman Sachs.
Anyone expecting Apple to open up its infrastructure so that other financial institutions can deploy a similar provisioning process are deluding themselves. Apple will keep NFC locked up and will increasingly monetize the identity of Apple consumers all in the name of protecting them. As always, Apple has developed a brilliant and profitable strategy that borders on impropriety but without obviously crossing that red line.
So how will IBM, Microsoft, Mastercard, financial institutions, and everyone else respond? If that response is to have any impact, it better happen quickly.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
