Apple’s savings account is about getting users to never leave

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Wednesday, April 26, 2023

Apple’s universe is expanding

Apple’s (AAPL) business model is largely based on ensuring you stay an iPhone user. Whether that’s by introducing new hardware accessories like its AirPods and Apple Watch, services like iCloud, or platforms like Apple Fitness+, everything is designed to keep you coming back to the iPhone.

But the introduction of its new high-yield savings account last week goes a step beyond hardware and software offerings. Apple is now keeping customers glued to its side by serving as their bank.

“If you got your money at Apple Bank and that savings account, the probability that you buy an iPhone, just renew and maintain your ownership of iPhone, goes up,” Deepwater Asset Management Managing Partner Gene Munster told Yahoo Finance.

And that’s exactly what Apple, and its investors, wants.

Keeping you hooked

Apple’s savings account, which is available to Apple Card holders and administered by Goldman Sachs (GS), is an especially tempting offering for customers thanks to its 4.15% annual yield. Apple says that’s more than 10 times the national average. In other words, you’re not going to get that kind of rate through your standard savings account.

What’s more, adding money to your Apple savings account is relatively simple. You connect your existing bank account to your Apple savings account and start moving money over. Daily Cash, the money you earn on purchases through your Apple card, is also automatically deposited into your savings account.

“You can just see how this is going to play out. It started out with payments at point of sale and they added it to web, went peer to peer…Then they added the Apple Card and now savings which is driving adoption of Apple Card. And eventually they’ll have checking,” Munster said.

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“It’s a beautiful model for them. They just keep building on top of each other.”

It’s not just the Apple savings account or Apple Card that are tethering customers’ financials to the company. In March, Apple announced the U.S. availability of its Apple Pay Later offering. The buy-now pay-later service, which allows users to apply for loans of between $50 and $1,000, splits purchases across four payments over six weeks with no interest or fees.

Another piece to power growth

Apple’s savings account isn’t likely to become a breadwinner for the company — and might not make much of a dent in its revenue numbers at all. But the service, along with the firm’s broader push into health coverage, which Bloomberg reports will include mood tracking and an AI-powered coach, along with its upcoming AR/VR headset, are all a means of helping power growth piece by piece.

“This is all part of Apple’s consumer flywheel, which continues to grow around health and banking,” Wedbush senior equity analyst Dan Ives told Yahoo Finance. “The health vertical is a key focus for Cupertino and this new initiative is a smart move that could further ramp growth in this key arena.”

For Apple, it’s all about adding more pieces. And getting you hooked on them.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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