Apple Acquires Open Banking Fintech

Apple Acquires Open Banking Fintech, Expanding into Finance

These must be devoured by Apple-ooids in Cupertino. Every time Apple makes an acquisition, the technology world—and increasingly, the fintech averse—goes into hyper-speculation mode, attempting to figure out why the business made the deal and what it wants to do with the acquired startup.

This week, Apple HQ is probably rolling on the floor laughing after the firm revealed it was acquiring Credit Kudos, a UK-based company that many people characterize to as an "open banking" company, for $150 million. And by "many people," I mean the extremely small fraction of the world's population who believe they understand what "open banking" means.

"With Credit Kudos' intelligent products, companies may utilize Open Banking to improve affordability and risk evaluations." We provide predictive insights by merging transaction and loan result data. Through our engagement technologies, we assist lenders expedite underwriting, increase decision-making accuracy, and maintain clients after acquisition."

While Credit Kudos describes its products as assisting lenders—whose goal is often to get people to max out on their debt and profit from borrowers' inability to pay it off right away—relax: the company's "mission," like pretty much every other fintech startup on the planet, is much more altruistic, promising to: "Transform the credit scoring system to deliver fairer credit for all; assisting individuals in accessing responsible finance at an affordable cost when they need it."

The fintech snark observation on apple card

Apple has evolved into a financial institution. The Apple Card may be the company's next great item, and it isn't a phone, computer, or tablet. It's also not a subscription service. Apple may have just solved its growth equation by positioning itself in the midst of consumer spending and finance.

The Apple Card's innovation is mostly driven by commercial models. The firm is taking use of an established base of devices, features like as cheap rates and no fees, and a portion of transactions built on top of Apple Pay. Goldman Sachs is the issuing bank, and MasterCard is a major payment partner for establishing a global presence. The iPhone becomes the wallet, but traditional cards will also be popular since they are easy on the eyes. Apple's credit card innovation is a mix of store-branded credit, loyalty programmers, and toll collectors.

And, if you're interested in Apple's service model ambitions, I recommend skipping the video, news, and game offerings. What does it matter? The profit margins will be carried forward by Apple Card. There will also be a business angle to this, since Apple Card is expected to be a corporate expense account addition, particularly for creative professionals and iOS heavyweights.

Open banking is the practice of allowing third-party payment service providers and other financial service providers to access banking transactions and other data from banks and financial institutions in order to enable secure interoperability in the banking industry. Third-party organizations can access the data using application programming interfaces, or APIs. As the global economy evolves, open banking is growing more popular because it enables faster, more secure transactions anywhere in the globe and provides customers with more choices to manage their money through the use of third parties.

A set of technology, laws, and services enable open banking, with the goal of allowing developers to establish new financial services, banking business models, and commerce capabilities. New client expectations and technology-driven rules are critical lubricants for open banking's success. Three factors work together to make the open banking ideal a reality: changes in banking policy, cultural changes, and technological improvements. making use of one Customers would be able to utilize the Pay Later capability effortlessly regardless of which card they used within Apple Pay.

Another financial pillar for Apple

According to The Block, Apple has bought Credit Kudos, a U.K.-based open banking firm that helps lenders make better credit judgments, in an increasingly active financial ecosystem. The platform is based on the open banking architecture developed in the United Kingdom and might be viewed as a rival to the major credit reporting agencies such as Equifax, Experian, and TransUnion. While not a huge purchase, Apple frequently uses M&A to enhance the functionality of its key products, such as the iPhone.

Open banking enables financial services firms to access and exchange personal financial data in order to provide more contextualized engagements that are integrated into a consumer's everyday life. This is done through the use of application programming interfaces (APIs), which allow apps to interact with one another. During the adoption process Although the United States trails behind Europe and Asia in terms of open banking, activity is increasing among both traditional and non-traditional financial businesses. The Credit Kudos platform presents itself as allowing companies to leverage alternative predictive insights to increase consumer access to credit, loan underwriting speed and accuracy, and continued contact with loan clients throughout the life of a loan.

The acquisition might pave the way for the debut of the Apple credit card in the United Kingdom, or it could improve Apple's credit platform in the United States, or both. While there is no indication of how Apple will use Credit Kudos in the future, there is no reason to expect the platform would be confined to solely credit items.

This is hardly Apple's first move into the financial sector. Using the Apple Pay mobile wallet and the Apple Card, the corporation has continued to gain traction in financial services (in partnership with Goldman Sachs). The development of an open banking credit-focused product, similar to what is now offered, might give users with credit score checks or alerts related with the Apple Wallet and/or Apple Card.

Having a broader means to assess credit worthiness beyond standard criteria might broaden the accessible prospect universe for lending products in the same way that many fintech businesses leverage alternative data to provide buy now, pay later (BNPL) services to individuals with thin credit files. As a result, it is feasible that Apple may enter this rapidly expanding product sector, leveraging its current credit card and wallet client base as a springboard for expansion.

According to Bloomberg, there were rumblings last year that Apple was planning to launch a product named 'Apple Pay Later.' The programme would employ Goldman Sachs as a lender for the loans, but it would not be linked to the Apple Card and would not require the Apple Card.

The Apple Card, which isn't a phone, computer, or tablet, may be the company's next big thing. The issuing bank is Goldman Sachs, and MasterCard is a main payment partner for creating a global footprint. The iPhone replaces the wallet, although conventional cards will remain popular due to their ease of use.

End Note

Apple has acquired Credit Kudos, a U.K.-based open banking startup that assists lenders in making better credit decisions. Apple Card is likely to be an addition to iOS giants' corporate expenditure accounts. Customers could use the Pay. It is very easy to access. It makes the process of payment easy. Its best platform for open banking and its going to be very useful in future. Later feature regardless of which card they used in Apple Pay. Open banking allows financial institutions to access and exchange personal financial information. Traditional and non-traditional activity is rising.