Apple has introduced a new feature for its iPhone Wallet app that allows users to see their current account balance and transaction history from supported banks in the UK. The feature, called Connected Cards, is powered by the country’s Open Banking API, which enables third-party access to bank data with customer consent.
What is Open Banking and How Does It Work?
Open Banking is a regulatory framework that was introduced in the UK in 2018 to promote competition and innovation in the financial sector. It requires banks to share customer data and payment services with authorized third-party providers (TPPs) through secure APIs, as long as the customer gives permission. This means that customers can access a range of financial products and services from different providers through a single platform, such as a mobile app or a website.
For example, a customer can use an app to compare and switch between different savings accounts, mortgages, or insurance products from different banks. They can also use an app to make payments directly from their bank account, without using a card or a payment network. Open Banking also allows customers to see an overview of their financial situation across different accounts and providers, which can help them manage their money better.
Why Did Apple Launch Connected Cards in the UK?
Apple has been expanding its range of services around payments, such as Apple Pay, Apple Card, and Apple Cash. The company also acquired a UK-based open banking fintech company, Credit Kudos, earlier this year. Credit Kudos uses transaction data and machine learning to create accurate credit ratings and risk assessments for lenders and borrowers.
By launching Connected Cards in the UK, Apple can leverage the open banking data and algorithms from Credit Kudos to offer more value-added services to its customers. For instance, Apple can use the data to provide personalized financial advice, budgeting tools, or savings goals. Apple can also use the data to offer its own credit products, such as buy-now-pay-later (BNPL) schemes or loans, with more competitive rates and terms.
How Does Connected Cards Work and What Are the Benefits?
Connected Cards is a feature that allows users to add their bank accounts or credit cards from supported banks to their iPhone Wallet app. The feature is currently available only in the UK, where there is an interoperable open banking standard. Users need to give their consent for Apple to access their bank data through the Open Banking API.
Once the user adds their bank account or card to the Wallet app, they can see their current balance and transaction history on their iPhone screen. They can also see their balance when they make a payment with Apple Pay, which can help them be more financially aware and responsible. Additionally, they can receive notifications and alerts when their balance changes or when they need to pay a bill.
Connected Cards can offer several benefits to users, such as:
- Convenience: Users can access their bank information and make payments with just a tap on their iPhone, without opening multiple apps or logging into different websites.
- Security: Users can use Face ID or Touch ID to authenticate their transactions, which adds an extra layer of security. They can also disable or delete their bank account or card from the Wallet app if they lose their iPhone or suspect any fraud.
- Privacy: Users can control which bank data they want to share with Apple and for how long. They can also revoke their consent at any time. Apple does not sell or share the user’s bank data with any third-party advertisers or marketers.
Will Connected Cards Expand to Other Regions?
It is unclear when Connected Cards will launch in other regions, such as the US or Europe. The main challenge is the lack of a common open banking standard across different countries and jurisdictions. Each region has its own rules and regulations regarding data sharing and consumer protection, which makes it difficult for Apple to offer a consistent and seamless experience.
However, there are some signs of progress in this direction. For example, the US Consumer Financial Protection Bureau (CFPB) said it expected to finalize an open banking rule by 2024, which would set guidelines for data access and security between banks and TPPs. Similarly, the European Union has implemented the Revised Payment Services Directive (PSD2), which mandates banks to open up their APIs to TPPs under certain conditions.
Apple may also explore other ways to access bank data without relying on open banking APIs, such as screen scraping or direct agreements with banks. However, these methods may pose some risks or limitations in terms of data quality, security, or customer choice.
