Digital Innovation Digest - March 2019 Digital Ecosystems (Payments) Apple Credit Card, Facebook CryptoCurrency

1. DIGITAL INNOVATION DIGEST
MARCH - 2019
#14

2. SUMMARY
This quarterly-produced document is an illustrated condensed of few but most relevant and inspirational trends or innovations in Finance / Banking
/ Insurances.
It was created for internal knowledge sharing purposes and to promote the digital culture among consultants and business managers.
[Credit Card] GAFAs & Credit Card World
[Payment] Link your license plates with your Banking application Belgium
PAYMENT
ECOSYSTEM
[Credit Card] Fidelity: Credit Card with a cause USA
PAYMENT
ECOSYSTEM
PAYMENT
ECOSYSTEM

3. 01The Apple Credit Card
With Goldman Sachs

4. The Apple Credit Card
In Short
Apple and Goldman Sachs are reportedly getting ready to launch their joint credit card as early as the spring 2019 (in USA).
Apple’s branded credit card is expected to come with:
• a rewards program (fidelity points) with selected partners
• a cashback reward on purchases
• and some iPhone financial tracking features enabled through
Apple Pay
• The credit card will integrate with the Apple Wallet app on
the iPhone to offer special features like the ability to set
spending goals and track purchase rewards.
The Apple Pay card will use the Mastercard payment network,
according to the Wall Street Journal.
specimen

5. The Apple Credit Card
Key features
• The physical card delivery will be preceded by a virtual
delivery: The card, upon approval, will be available for
immediate use via Apple Wallet, no more need to wait for the
plastic piece before using it.
• The Cashback program will be designed to favor Apple (of
course):
• The card will offer daily cash rewards of 3 % on Apple
products purchases.
• 2 % on purchases made with Apple Pay
• 1 % on purchases made with the card.
• The card will come with no card number, CVC or expiration
date on it, (the PAN number can be found on the device).
• An upscaled Titanium version of the card is already foreseen.
• The Apple Card will offer workaround
solution for physical PoS were Apple
Pay is not available but will be useless
to purchases on e-merchant website
without Apple Pay solution.
• Apple’s credit Card is natively
integrated with iPhone: real-time views
of transactions and balance will be
displayed in Wallet, and support will be
available 24/7 by sending a text from
Messages.

6. The Apple Credit Card
Analysis Why offer a credit card ?
Apple’s main source of income, iPhone sales have begun to
stagnate and Cupertino’s firm is seeking to diversify his incomes
sources.
For the same reasons, the company is expected to launch
an entertainment-streaming service, a premium news service, and
potentially a gaming platform.
Apple Pay takes a 0.15 percent transaction cut from the bank every
time someone decides to pay with their iPhone (the rest of
transaction fees are for the card issuer). Tim Cook’s company
would be able to take a bigger cut of the ‘swipe fees’ made with its
own brand card.
As the Apple card is intimately linked to Apple Pay system, that
new goodies is a way to dope the penetration rate of Apple pay
(actually in use on barely 1/3 of iPhone)
Why Goldman Sachs as partner?
Despite a well know name, Goldman Sachs (GS) is relatively
inactive in the retail consumer market. Late 2016, GS launched a
consumer lending business called Marcus and since Goldman is
trying to extend its services to a wider customer base.
Tech-savvy iPhone owners are ideal lending candidates for
Marcus’s consumer loans.
Building a partnership with a newcomer in retail market, like
Goldman, is also working on a greenfield. The bank does not have
any previous agreements with Airlines or other retailers for
example, making easier the establishment of (new) exclusive
partnership with/for Apple.

7. The Apple Credit Card
What About Amazon ?
Amazon is also active in the credit card business with
various offers.
One is the Amazon Rewards Visa Signature Card offering various
cashback for online and offline purchases. Amazon is also proposing
an American Express card intended for Business customers.
Of course, these cards are designed to offer more rewards to
Amazon (Prime) customers, but they can also be used outside
Amazon's ecosystem.

8. The Apple Credit Card
And Facebook ?
The Social Network doesn't propose (at the moment) credit cards. It
seems that Zuckerberg’s creature prefers to focus on his own
Cryptocurrency.
According to Financial Times, Facebook may be currently creating his own Crypto
currency. It would be used on WhatsApp, which Facebook owns, to facilitate
transactions between users.
The potential is huge (more than 2.7 billion people are using Facebook, WhatsApp
or Instagram) and that move could hurt strongly companies like MasterCard or Visa.
Of course, to conquer such financial paradise, it will be necessary for Facebook to develop also his own Wallet in competition with Apple or
Google. In addition, if Facebook is backing the conversion value of its coins with real world money, few would see the need to convert their
Facebook coins in and out of their Facebook mobile wallets frequently.

9. The Apple Credit Card
Analysis (cont.)
What’s the hype with Credit Card and Gafa’s ?
For the GAFA as well as for any Social Network more or less involved in e-commerce or payment
transfer, the integration of home-made credit card is a step closer to the dream of being able to post
and sell items directly within its apps, down to the payment process.
No more clicking links to 3rd party sites and lower transaction fees.
Such result could also be achieved partially in Europe thanks to PSD II, but without the consequent
benefit to be able to track buyer’s behavior even when they are off line or out of your ecosystem.
With his crypto Currency, Facebook will go further with “money” directly moved from buyer mobile
wallet to the seller.
Here, no more typing in credit card or PayPal account details, no exchange rate spreads.
Social networks, instant messaging and e-commerce will become truly integrated. *
*Like it’s already the case with Alibaba / WeChat / AliPay…
Good to know:
Telegram, (300 million users worldwide)
is also working on a digital coin and so
do the biggest messaging applications in
South Korea and Japan, KaKao and Line.

10. 02Fidelity: Credit Card
with (potentially) a (good) cause

11. Fidelity: Credit Card with a cause
In Short
A simple idea…
Like any other Credit Card, Fidelity is proposing a credit card fitted
with Cashback perk.
The differentiation comes with the possibility to automatically
transform refunds into investment or saving: Instead of being
credited on user’s current account, refunds can be automatically
assigned by example to long term saving account, retirement
account, charity gift or investment fund. It's all based on
customers choices.
By this, Fidelity is trying to keep cashbacks in a “closed circuit”;
refunds can be transformed into Fidelity products.
… but very common
Fidelity is not the first bank or fintech to propose automatic savings.
Tens of PFM, e-Wallet or Neobanks (Yeeld, Sqirl, Revolut…) and
even classical banks like LCL or MonaBanq are proposing micro-
saving by rounding automatically all expenses.
The key point in Fidelity initiative is the capacity of the system
to “recycle” cashback into save & invest.
In France, such system could be implemented to feed a buffer
that could be used to avoid “agios” and incident fees –
traditionally very expensive - and repetitive source of debt for
the most financially weak clients.

12. 03KBC app enables customers
to link number plates for
easy parking payment

13. Link your license plates with your Banking application
In Short
Customers from the Belgian Bank KBC can now link their
vehicle’s number plate to their KBC Mobile banking app so
payment is automatically taken when they use a Q-Park car
park.
No more need to withdraw a parking ticket at the entrance, or
pass by the payment terminal when you leave the parking.
A camera at the car park entrance reads the plate as the
vehicle approaches and lifts the barrier. The plate is read again
when the vehicle leaves and the current account linked to it is
debited automatically with the correct fee.
Register you car plate in
KBC app and link it with
your current account
At parking entrance the car
plate is read and the gate
opens when a match in KBC-Q
Park database is found.
When you drive out, car plate is read
again, parking session is automatically
paid and the barrier opened.

14. Link your license plates with your Banking application
Analysis
KBC / CBC continues to develop its digital ecosystem
centered on payments and mobility services with its partner
Olympus Mobility.
Olympus is a B2B mobility service Hub, the company is the
intermediary between various mobility service providers and
partners (clients) like TOTAL, ALD Automotive, KBC, Belfius,
MasterCard etc.
Olympus is managing APIs and commercial relationship with
multiple services providers while Olympus client just needs
to integrate one unique API.
Olympus’s clients
Mobility service are a common hobby-horse for banks willing to develop digital
ecosystem. In Belgium, KBC and Belfius are in good position on this kind of
service offer (with same partner Olympus).
The reason is simple: mobility services are suitable to be used on a daily basis –
exactly like payment services and banking app. For a bank, providing such
integrated services is a good way to create added value and more recurrent
interactions with their customers without requiring a change in their habits.

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