Tech giant Apple is making a declaration of war: In the USA, the company will be offering a savings account on which customers will receive interest of 4.15 percent per year. The offer is a joint project between Apple and the US investment bank Goldman Sachs.
With the announcement, the tech company is putting enormous pressure on classic banks. So far, they have only paid their customers negligible interest on savings: According to the Financial Times (FT), the average US savings bank rate is just 0.37 percent. So Apple’s 4.15 percent is more than ten times that. And even good offers like those of the competitor American Express (3.75 percent) or Apple’s cooperation partner Goldman (Marcus savings account 3.9 percent) put the tech giant in the shade.
So far, the account has only been reserved for users in the USA who already have the Apple Card credit card. Customers can deposit a maximum of 250,000 euros. The money is managed by Goldman Sachs. The bank has also been issuing the Apple credit card since 2019, and the payment system in turn runs via Mastercard. Goldman has meanwhile been criticized for algorithms that discriminate against women when granting the credit line for the Apple Card.
With the introduction of the fee-free savings account, Apple is apparently trying to further bind its customers to itself and to strengthen the Apple Card credit card and its own Apple Pay payment service. Customers should be able to manage the account via the iPhone wallet app.
It is rather unlikely that the account model will soon come to Germany. Apple launched the payment service Apple Pay in 2014, and it was only introduced in Germany in 2018. In perspective, however, it could well be that the credit card will also be offered in Europe and Germany at some point.
Some market observers believe that Apple is gradually becoming a bank. The CEO of the payment service Paddle, Christian Owens, contradicts: “I don’t think Apple wants to be a bank,” he told the FT. “I think Apple can exploit the economics of a bank without becoming a bank.”
For smaller banks in particular, Apple is increasingly becoming a competitor through its cooperation in the financial sector. They have recently come under pressure to offer depositors better savings rates – also to prevent them from migrating or reallocating their money to funds.
Since the US Federal Reserve began raising interest rates in March 2022, customers have withdrawn around $800 billion from US commercial banks, according to FT. This is not really surprising, however, because the credit institutions then demanded more for loans, but at the same time did not pass the higher interest rates on to their customers.
In Europe and Germany, bank customers are confronted with a similar phenomenon. In Germany, too, many financial institutions are still not passing on the rise in key and capital market interest rates to savers.
According to data from the deposit broker Raisin, the interest rate for overnight money with a term of up to one year was 1.95 percent at the end of February; in 2022 it was only 0.06 percent. On sight deposits, on the other hand, i.e. savings accounts that are available at any time, banks recently paid their customers just 0.12 percent interest on average and in a twelve-month comparison.
That could change now, because there is movement in the market – not only by big players like Apple: In Germany, the ING Bank will in future offer three percent interest on its overnight money – at least for new customers and new money from existing customers. Previous deposits continue to earn interest at only 0.6 percent, which is hardly higher than at many savings banks or cooperative banks. In addition, the offer is limited to six months.
The Berlin neobroker Trade Republic had previously given the go-ahead for the interest rate race with interest rates of two percent. Branch banks are now also likely to enter, predicts Oliver Geiseler, senior partner at the management consultancy Capco. In addition to the branch banks, he also expects savings interest rates to rise at car banks. The financial divisions of Volkswagen, BMW and Mercedes use savings to refinance their business.
This article first appeared on Capital.de.
