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28.01.2022

The iPhone and what it means for FS businesses 15 years on

Monavate Insights

We examine the legacy of the iPhone, how its transformed business, and the key take-aways for financial services.

It was January 09, 2007. Steve Jobs took to the stage at a Macworld convention in his trademark turtleneck and jeans to unveil the iPhone. This touchscreen mobile phone with built-in camera, music player and web-browsing capabilities has been truly transformative. But how exactly? And, more importantly, how is its influence being felt in the financial services sector today?

 

Improvement rather than invention

It’s not through invention but through improvements that fortunes are made. Henry Ford, the 20th century car manufacturer, is alleged to have said this. The sentiment also applies to the iPhone, and more widely to 21st century tech and finance businesses.

Jobs’ genius was not inventing the telephone, camera, music player or portable computer. They already existed. Nor was it inventing the dozen or so technologies that made the iPhone work. Jobs brought together pre-existing elements in a new way in the iPhone. He created the right product at the right time for the right customer.

Those looking to develop FS products and services take heart. Success may be less about inventing a new product category. After all, payment, saving, investment and insurance are enduring needs. And more about finding improved, and perhaps increasingly digitalised ways to attract, segment and retain customers.

 

Intangible rather than tangible

Apple under Jobs moved business value from the tangible to the intangible. Post- iPhone, business became less about making and selling your own stuff, although Apple did that. And more about enabling people to access and use services (one’s own and those of others), which Apple has done better than most.

Apple’s services division delivered $70 billion in revenue in 2021, roughly double that of physical products like the Mac, iPad or wearables. This is principally from recurring App Store fees and the nearly 800 million customers paying for digital media. So much so, services will account for an estimated 25 percent of revenue by 2025.[1]

Those looking to develop FS products and services can take note. It’s almost inevitable nowadays that any successful business model will build and leverage intangible assets. These are the intelligent assets that can be leveraged repeatedly for scale and profit. Think: data, connections, brand. Data, particularly around Open Banking and Open Finance, API connectivity and SaaS technologies are powering new FS opportunities for incumbents and new entrants alike.

 

Ecosystems and network effects

The iPhone has created ripple effects, which have transformed other industries: software, music and advertising to name but three.

The launch of the App Store in 2008 enabled people to download software applications to use their iPhones for games, travel planning, health monitoring and more. By opening their platform to developers, Apple unleashed downstream innovation, new business models, synergies and network effects.

Successful financial services firms are already harnessing the power of platforms. They’re building ecosystems to allow customers to connect with themselves and other providers. They’re partnering smart. And they’re benefiting from the scale and revenue from these multiple business models and interactions.

 

How Monavate can help

We know how important it is for financial and non-financial firms to launch stand-out services quickly. Monavate helps cut pre-launch trial, error and hassle by offering BIN sponsorship as a fully managed end-to-end service.

You get all the features you’d expect – card issuance, fraud prevention, card bureau integration among others – plus value-added options. And with access to our network of partners, technology and experts, you’ll have everything you need to set up, scale and manage a card programme in no time.

[1] ‘Apple at $3tn: the enigma of Tim Cook’, Financial Times, 7 January 2022