We have Apple to thank for a decade of fintech revolution

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Innovation happens when disparate things get connected (Source: Getty)

Today marks the 10 year anniversary of when the iPhone first went on sale, and to say it has transformed how we work, interact, and run our day-to-day lives is an understatement.

The iPhone has not only led to significant technology advancements in the smartphone space, it has also been the driver of mass industry transformation and resulted in the creation of new and radical business models.

In a recent podcast, Wharton professor David Robertson comments on an approach to innovation referred to as a “Third Way”. This is “low-risk, high reward innovation”, which means taking a current product and innovating around it to make it more valuable for an organisation’s customers.

Read more: Now you can use Apple Pay in Ireland

Looking more specifically around the ubiquity of the iPhone, the fintech sector in the UK is an ideal example of the Third Way approach to innovation. The industry (much of it “app-first”) attracted $783m in investment last year, according to figures published by Innovate Finance.

You only have to read the BBA’s report, “The Way We Bank Now”, to understand the scale at which consumers are increasingly focusing on apps to interact with financial services institutions. There are 347m payments done using banking apps (a rise of 54 per cent since 2014), and 11m banking app logins a day (a rise of 50 per cent since 2014).

The result of these changing consumer behaviours? The rapid evolution of a new app-only ecosystem with pioneering business models, transforming the way we borrow, lend and shop, and reach the banked and unbanked.

“Innovation happens when disparate things get connected”, says Alain Falys, co-founder and chief executive of Yoyo Wallet, a multi-brand mobile payment and loyalty app. “With the iPhone, advances in tech got connected to the increasing number of devices and platforms needed to perform day-to-day habits – texting friends, taking photos, checking emails, listening to music, going online. The genius of Apple was in successfully joining the dots between their tech to solve such an ambitious problem.”

Anne Boden, chief executive and founder of mobile-only Starling Bank, agrees that connectivity has made the impossible not just possible, but commonplace.

“Before the iPhone, a lot of the things we now take for granted on our mobiles just weren’t really imaginable – not least finance through your phone. It certainly has made it possible for ideas like Starling Bank to become a reality. After all, prior to the rise of the app, mobile banking was almost unheard of and payment technologies were pretty much exclusively online rather than mobile. All that changed with Apple revolutionising the smartphone landscape.”

Mobiles have also helped to reach the more consumers, particularly, the underbanked. Take for example the digital money transfer market. Mobile phones have helped to democratise the way people send and receive money, by drastically reducing transaction fees and giving key segments of the population – mainly migrant workers – the opportunity to support loved ones back home from the palm of their hand.

Before the advent of the iPhone, the market was monopolised by a handful of large players. Today, the $700bn a year industry is being disrupted with innovative fintech startups harnessing the power of mobile connectivity.

“The iPhone was a beautiful innovation in technology,” says Alice Newton-Rex, vice president of product at WorldRemit, one of the world’s leading digital remittance firms. “Over the next 10 years, innovations won’t be beautiful – they’ll be invisible. The iPhone taught us to ‘swipe’ and ‘pinch to zoom’, but now interfaces will merge seamlessly with our most natural interactions, like voice and vision, and they'll be powered by AI as intelligent as we are.”

Oval Money, an app that allows customers to keep track of their financial spending, also relies on the mobile phone to reach consumers of all backgrounds.

“The smartphone has given many people access to financial services who otherwise would have been excluded from the traditional financial system, either because they live in marginalised areas or because they fit into underserved categories like the self-employed or women,” explains Benedetta Arese Lucini, chief executive of Oval Money.

“The iPhone remains a device that gives people better access to financial services. The next suite of innovations will dis-intermediate this device, and people will interact with financial services directly with their own bodies or other objects – via voice, facial or fingerprint recognition. This creates new challenges for deep machine learning developers, plus an amazing opportunity to access data that provides more targeted solutions for individuals.”

Plum Financial, a fintech startup that uses AI-driven chatbots to help people manage their finances, shares a similarly optimistic view of the future role of iPhones in financial innovation.

“We are now seeing huge advances in technology that will revolutionise the way we live our daily lives,” says Victor Trokoudes, chief executive of Plum. “Add AI and a creative entrepreneur to the mix and the possibilities really are endless, consumers will experience a wave of tailored solutions that force banks to redefine their business model.”

Albert Einstein would most certainly have agreed: “we cannot solve the problem with the same thinking we used when we created them.”

Read more: How regulation and market priorities drive fintech focus globally