WORKWEEK

The tech industry has been abuzz with news lately. Apple and Twitter have made major moves into the financial world. 

Apple is offering a high yield savings account in partnership with Goldman Sachs, while Twitter has teamed up with eToro to enable users to trade stocks directly from its platform. 

These moves are just the beginning of a larger trend of technology businesses providing financial services and striving to become the ‘super app’ of the world. 

Let’s think out loud about both announcements together, shall we? 

Apple Launches HYSA With Goldman Sachs

ICYMI: Apple took another big step into the banking space on Monday and launched a high-yield savings account for Apple Card customers, launched in partnership with Goldman Sachs. 

The announcement made a splash yesterday largely because Apple’s 4.15% APY is way higher than the national average APY, which is just 0.35%. In August 2019, Apple and Goldman Sachs launched the Apple Card, and now they are collaborating once again to offer the Apple Savings Account.

When I first saw the announcement I’ll admit, I immediately went to my Apple Wallet and started applying for an Apple Card just because of the hype and intrigue of the user experience. I needed to know!

But then I thought: Nicole, do you really need another account right now? So I stopped opening my account and took a step back (though, to open an account would’ve taken me no time at all). 

I’m mildly surprised, however, at how many questions about why Apple or why Goldman Sachs would embark on this collaboration together. I’m seeing Twitter questions like: 

Why couldn’t Goldman Sachs just increase the APY on their consumer platform, Marcus? (Current APY is 3.90%)

And why would Apple want to attract potential customers interested in rate chasing (that typically is not likely to be sticky)?

IMO, it’s an easy win-win situation for both parties. Goldman Sachs gains access to Apple’s large customer base (roughly 2 billion active users), while Apple is able to offer financial services without having to become a bank itself. 

While fintech companies have been disrupting the traditional banking model for years, they often lack the resources and customer base of larger tech companies. So this checks out. 

Sure, this savings product is seemingly Goldman Sachs’ Marcus in a different package. But that’s kinda the point – not all Apple users have any idea what Goldman Sachs offers. 

So, Apple has the distribution and smooth user experience. Goldman Sachs brings the FDIC insurance and traditional bank “trust” factor that still holds prominence with some consumers today. 

And it ultimately benefits consumers by providing them with a wider range of financial products and services.

Plus, both companies can gain insights into customer spending habits that can be used to develop more effective marketing strategies and tailor products and services to meet customer needs and personalization. This could lead to a more dynamic, agile business environment that is better-equipped to meet changing market conditions.

Other pros I see: 

1. Diversification of Services: Apple has been diversifying its services beyond hardware and software products, and the launch of a high yield savings account is a part of this strategy. By offering financial services, Apple can expand its customer base and generate additional revenue streams.
2. User Experience Clout: One of the biggest advantages of the Apple Savings Account is the convenience it offers. The account can be opened and managed through the Wallet app on an iPhone, making it incredibly easy for consumers to access their savings. This level of convenience is something that traditional banks have struggled to match.
3. Increased Customer Loyalty: The Apple Savings Account is only available to Apple Card customers, which can increase customer loyalty and encourage users to remain within the Apple ecosystem. This may lead to increased customer retention and repeat business for Apple.
4. Attract New Customers: In a low-interest rate environment, consumers are eager to find ways to earn more on their savings. By offering a high yield savings account, Apple is meeting this demand and further disrupting the traditional banking model.

Cons I see: 

1. Just a Hype Cycle: While the 4.15% APY offered by the account is attractive, it is only available for a limited time and is subject to change based on market conditions.
2. Limited Features: The account is a basic savings account and does not offer some of the more advanced features available through other fintech companies, such as investment options or budgeting tools.

Ultimately, we’ll all just have to sit back and see what happens here but I do embrace collaboration as a way to propel us toward greater innovation and financial inclusivity. 

Speaking of collabs… 

Twitter Partners With eToro To Let Users Trade Stocks

I should have seen the writing on the wall here. 

Earlier this year, I hosted eToro founder & CEO Yoni Assia on my podcast (listen to that here). I asked him who’s one person he wants to collaborate with. Quickly, he proclaimed “Elon Musk!” 

I thought he was joking. 

He wasn’t. Twitter has announced a partnership with crypto exchange eToro to let its users trade stocks, cryptocurrencies and other assets on the social network’s platform.

The deal comes hard on the heels of Twitter CEO Elon Musk merging Twitter into a shell company named X Corp., which he says he would like to turn into an “everything app.”

Everyone wants to be everything, everywhere, all at once. 

Once again we’re seeing big tech (Twitter) partner with a well-established fintech company to share resources, data, and growth both businesses while also giving users what they want – access to knowledge and financial services. 

I had to tap Lule Demmissie, CEO of eToro US to give me the tea. Here’s what she spilled (in Q&A form):

Nicole: Why does partnering with Twitter make the most sense to help push financial education, content, and investing forward to open access to more people?

Lule: Twitter has powered many connections on the topics of news and financial news for “regular” folks (aka: not just the institutional voices) and our brand promise is to do the same.  

There are many synergies between our two companies that make this partnership feel right to us on the most foundational level, Twitter is a space for conversation, where networking and interesting financial dialogue take place, eToro is a financial services provider built on the belief that social investing is the part of the future and that we can all do better by investing together and fostering dialogue in large networks.

We know that these days the everyday investor doesn’t have time to read a 5 page white paper on a single stock. The inherent short form and ease of messaging on Twitter appeals to today’s investor.

Nicole: Is partnering with Twitter also a way to grow eToro’s footprint in the US?

Lule: Absolutely!  On average there are 4.7 million $Cashtag searches a day. 

We hope that this daily volume will of course bring people to our platform to invest but aside from that we hope to introduce people to investing.  We have a virtual portfolio which allows people to invest with fake money so they can practice without taking on financial risk if they aren’t comfortable.

We want to help people feel comfortable taking ownership of their financial futures- the goal is engagement and accessibility. 

We also want people to feel confident in the social investing ecosystem when consuming financial information, especially in today’s environment.  

With the Twitter partnership, they get the open and free dissemination of information from Twitter and then can come to eToro with the sanctity of knowing we are a regulated financial platform and build in our social trading ecosystem elements that foster transparency and policies that serve as belts and suspenders, e.g., monitoring for problematic posts, monitoring for abuses, requiring user transparency to engage in the social feed, strong onboarding / KYY process.

 Nicole: Any additional thoughts you’d like to share on this partnership?

Lule: It’s April – financial literacy month – so I want to highlight that you can’t have long term wealth generation without participating in capital markets. There is never a bad time to start investing. Practice first, then invest.  We hope that our partnership with Twitter enables us to get this message to more people.

You heard it here from Lule herself! And if you’re looking for more, eToro dropped a new survey today about financial literacy. Here’s some key stats: 

• 66% of Americans start learning about financial literacy before their 30s, while 69% believe financial education should begin in teenage years. 
• Three in four Americans believe financial literacy should be taught in formal settings such as schools. 
• Younger people are more comfortable discussing finances and investing on social media platforms than in person, with 37% of those between 25-34 saying they prefer social media. 
• Men are more confident in investment decisions than women, despite equal involvement in household financial management (we have work to do here!)
• 63% are satisfied with current financial literacy resources, but there is a need to expand access for all backgrounds and identities.