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Peter Misek is a partner at Framework Venture Partners LP

The launch of the Apple Card last week was another step in the path of fintech that Apple started with the launch of its Wallet in 2012. The path has been slow and arduous. Like most things Apple, the grand vision and execution unfolded on the company’s own schedule and not on any predetermined timeline. Apple sometimes leads, sometimes follows, but often invents a whole new category.

At its event last Monday, Apple unveiled a no-fee, cash-back credit card available in the United States in partnership with Goldman Sachs, that comes with an Apple-branded titanium card. Chief executive Tim Cook called the move “the most significant change in the credit-card experience in 50 years.”

The Apple Card embedded and enabled on the iPhone is a game changer. Why? Apple will retain full data rights within its ecosystem (albeit used and processed within devices rather than Apple servers). This means Apple and its partners can offer financial products right on the iPhone. Apple Card will have immediate and deep financial connectivity and it will be able to see everyday purchases in real time, while populating a rewards card in real time. So where is this going?

At Framework Venture Partners, we believe that the future of finance will be shaped by what we’ve labelled Fintech 2.0. Simply put, our thesis is that standalone financial products and services will largely disappear and will instead become embedded in the flow of applications people use every day. The value won’t just be from this integration, but rather from the way in which artificial intelligence will enable purchases, savings and lending to be managed and delivered in an optimal and intuitive way.

Combining real-world attributes with digital footprints into a seamless product will change the face of banking and ultimately the experience of businesses and consumers. Imagine for a moment that the Apple Card is used for all of a person’s daily transactions. After some relatively short period of time, say 12 to 24 months, Apple will be able to tell with a high percentage of accuracy what a person’s income, financial and personal situation looks like on an intimate level.

This itemized visibility will mean that Apple is likely to forecast when you get married, have children or will be looking to make a major purchases. With all this data, Apple could then offer this person real-time money movements, savings, investments and even mortgages with virtually no paperwork. More importantly, Apple could offer these products with preapproved amounts and rates customized to that person’s projected credit risk.

While this seems scary to some, to millennials who are struggling with personal financial literacy, this may be the solution they were looking for. Only 24 per cent of today’s millennials demonstrated basic financial knowledge, according to a study in the United States by PwC. The need for help has become a chronic societal issue.

Enter Apple: Getting advice in real time on how to save, how to spend and finding solutions for this in real time is the future. Our belief is that within 10 years, Apple Card will migrate into Apple Finance. This shift will direct you where to buy your next pair of shoes at the best price within your budget. Apple will be able to take your excess savings and provide products optimized for your personal situation. Ultimately, placing cash within the Apple supply chain could displace Wall Street’s savings accounts, investment funds and much more.

While the timing of all of this is difficult to predict, what isn’t difficult to guess is that Apple won’t stop with Apple Card. The future of fintech is clearly on the smartphone and within software, not inside a branch and mainframes.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 6:40pm EDT.

SymbolName% changeLast
Apple Inc
Goldman Sachs Group

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