Apple Card Highlights Disruption Potential for Tech Industry

Well, that was a surprise…not in terms of what Apple announced at their big services event—which frankly had few, if any surprises—but about what I was most excited about afterwards.

In part because there were so few details about the pricing and extent of their highly expected streaming TV service, the thing I walked away from the Steve Jobs Theater being the most impressed with was—wait for it—Apple Card.

Yes, a physical credit card, but more importantly, the virtual credit card services that are the latest extension to Apple Pay. In multiple ways, Apple Card is a great expression of what Apple does best. They find things that create pain points in our lives and make them much simpler by essentially reinventing them and how we interact with them.

Of course, there was hope that they would do the same with TV content and services too. But, while it’s too early to say for sure, my initial take is that they weren’t quite as successful there. Sure, the new Apple TV+ app looks nice and integration with a number of partners looks good, but there are several TV content aggregators already out there. Plus, to get the kind of comprehensive package Apple promised, you have to get local news and sports from one source, movies from iTunes and/or other streaming services, and then Apple’s content as well. Oh, and if you’re a fan of content from Netflix or if you like to watch TV content on Android devices or Windows PCs, you’re out of luck. That’s a lot of work and compromises for what’s supposed to be a complete service that works across “all your screens.”

On top of that, though it went by very quickly, I could’ve sworn I briefly saw a $10.99 monthly price for the ShowTime service that was added during the demo—not the $9.99 that had been expected. So, lots of pricing questions still remain—not the least of which is how much Apple will charge for their own original content.

In the case of Apple Card, however, the value proposition was much more straightforward, and the end product much more appealing as a result. Not only did Apple promise to rid people of dreaded fees associated with credit cards—late fees, international charge fees, etc.—they also completely rethought the experience of using a credit card. The software-based app experiences enabled via Apple Card range from leveraging on-device machine learning to easily label charges, to providing practical insights on how to reduce interest charges, to logical organization of charges and trends in spending. They also integrated strong privacy and security by requiring biometric recognition for all charges (via face or fingerprint recognition), tying transactions to the secure ID inside the iPhone, and keeping everything anonymized to prevent tracking of purchases. All told, it was the best example of the old Think Different Apple philosophy that I’ve seen in some time.

Not only that, but Apple even managed to sneak in a tiny bit of hardware into Apple Card via the titanium physical credit cards that they’re making part of the offering for those locations that don’t take Apple Pay. While you can argue it was a bit over the top, it was classic Apple in the best way, with even the tiniest details done right. (Or, as I joked with others, more proof that Apple still does hardware best….) The cards have no number or expiration date—just your named etched into them. Frankly, if I was part of another credit card company, I’d be nervous, because Apple completely reset the bar on what people are going to start expecting from a credit card.

In that regard, the Apple Card launch was also a great example of another broader phenomenon that we’re starting to see play out, something I’ll call “reverse transformation.” As big companies in other non-tech industries are going through what many like to call “digital transformation” and morphing into tech-driven organizations, tech companies are starting to look the other direction. They’re observing these trends in traditional industries and recognizing that those industries are now even more ripe for disruption than ever. By applying their “digital” expertise towards problems that have plagued or limited those traditional industries, and applying a fresh perspective to those issues, tech companies are becoming very real threats in industries that, just a few years back, seemed very far removed from tech. In effect, they’re taking advantage of an opportunity that didn’t exist until these other industries started to digitize themselves.

To be clear, not all industries are necessarily subject to this reverse transformation, nor are all tech companies equipped to take advantage of these new potential opportunities. But as Apple is starting to demonstrate with Apple Card, the possibility of digital transformations creating more risks for traditional industries and companies than many originally thought are very real. These types of changes won’t happen overnight, nor will Apple Card immediately disrupt the entire credit card industry, but the possibility of dramatically new tech industry-inspired services are clearly an interesting new possibility for us all to consider.

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Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

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