Tuesday, December 6, 2016

ApplePay proves that Large Companies can have Much Greater Success with Innovation than Startups


There are hundreds of small financial technology start-ups that are trying to disrupt the current financial structure which banks provide. Here in Canada, there are 5 major banks that have such a large and established customer base that they are not threatened by the fintech startups with great ideas but no brand, and no cohesive way of bringing together payments, credit cards, lending, investing and wealth management. The cost of getting new clients for the startups is much greater than the return they can accomplish in the short to mid term. The smart startups sell or licence their technology to one of the large banks, rather than trying to brand themselves to be the next Uber in the financial world.

Large players, however, have the ability to make a large shift in the world of personal banking. Enter Apple with their ApplePay. A lot of people have iPhones, but not necessarily cash. So Apple has provided ApplePay to allow consumers to purchase without a credit or debit card. Instead, their bank account is linked directly to their iPhone or Apple watch, and payment may be made directly. There's an additional benefit that cashiers don't see card details, so it's more private. This is gaining steam because Apple, unlike startups, has a brand name that people trust!

It's a great innovation, and the Canadian banks have jumped on board. They all offer links for ApplePay to their bank accounts and credit cards, and even go so far as to market the service to their clients.

Now that Apple is collecting a lot of information on consumers about their payments, they could leverage that to offer credit cards, and other lending products. With their brand, agility and reach, they could become a major factor in the financial industry in a very short time period -- proving once again that big business has more to gain from innovation than startups!

The author, James Allan, is an expert in business innovation who helps business leaders create and sustain infectious innovation to dramatically grow revenues. Contact James for more details at james@shmconsulting.net, or visit his website at www.shmconsulting.net.

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