A card designed with Apple enthusiasts in mind

October 21st, 2019 | Jeannette Ornelas

Can a digital-first (titanium-optional) credit card pull users deeper into Apple’s ecosystem? Apple loyalists are prime prospects for a card that lives in the Wallet app and offers 3% cashback on Apple purchases. Still, interest in the Apple Card can span beyond brand loyalists if Apple can balance credit risk.

A loyal customer base fares well for Apple

Apple’s target audience is ingrained in its ecosystem. According to Mintel research on mobile phones, over half of iPhone owners say it is difficult to switch to a smartphone with a different operating system, and more than 95% plan to stay with the brand. This has much to do with the ecosystem Apple has built and the various products/services that pull consumers deeper into Apple’s walled garden. 

Apple’s integrated ecosystem is its greatest marketing asset. Its commitment to providing an exceptional customer experience relies on every customer touchpoint yielding a consistent Apple experience, and that all of those experiences are connected, integrated and complementary. After all, Apple’s marketing success is a symbol of status that is driven by emotion, not practicality. 

With brand loyalty comes high-risk applicants

High brand consideration among young smartphone shoppers fares well for future Apple Card prospects, but it also raises credit-risk. Comperemedia ePerformance data shows that around half of Apple Card applicants have been rejected and around 450K acceptance emails have been issued. 

During Goldman Sachs’ Q3 FY19 earnings call on October 15, Stephen Scherr, CEO of Goldman Sachs, commented on Apple Card rejection volumes, “The approval rates early on have been lower and I’d say that that’s a decision obviously Goldman Sachs is making as the bank, but we’re doing that in concert with Apple and it’s because we’re quite vigilant from a risk point of view…over time, we’ll start to see better credits appear, the approval rates will go up, but we’ve seen an enormous inbound.”

Comperemedia analysis of data from social listening and analytics firm Infegy found higher rejection rates among young applicants. Consumers aged 25-34 were most likely to say they applied for the card and most likely to say they were rejected. 

The Apple Card’s digital-first positioning sets it apart

The Wallet app is the focal piece of the Apple Card experience and consumers are responding positively. The card’s rewards structure creates positive reinforcement, which generates positive word of mouth that can help Apple move the needle for Apple Pay adoption. 

Further analysis of data from social listening and analytics firm Infegy found men are nearly four times more likely than women to express interest in the Apple Card. This has much to do with their likelihood to be early tech adopters and interest in fintech. Per Mintel data on consumer attitudes toward fintech, men are more likely than women to be interested in opening a financial account from a technology company; Consideration is highest among men aged 18-34, at just over 50%. 

What We Think 

The Apple Card seeks to pull users further into its ecosystem and has the tools available to do so, but it must strike a balance within the credit-risk profiles it attracts. Currently, the card’s appeal is predominantly among young, male, brand loyalists. These early adopters may offer the brand advocacy Apple needs to move the needle with more mainstream consumers.