Apple has recently bought the British fintech startup Credit Kudos. This is a really interesting development because Credit Kudos offers an instant credit check service built on opening banking standards. Credit Kudos quickly scans the banking data of the customer to determine if a loan can be approved.
The deal is valued at about $150m and instantly gives Apple a credit-checking facility, but Apple and everyone around the deal is currently keeping all the details close to their chest. There is no formal discussion about why Apple made the purchase or what they intend to do with the service.
To my mind, I think that Apple could be about to upset the “apple-cart” in the world of traditional credit checking systems - services provided by companies such as Equifax, Experian, and TransUnion.
This is only my speculation, but look at the journey Apple has already taken. Their Apple Pay digital wallet is is now one of the biggest mobile payment systems globally. Apple has partnered up with Goldman Sachs to create a credit card service that rewrites the rules on how traditional credit cards work. Now they are also adding ID documents like driver’s licenses and ID cards into the Apple Wallet.
What’s the next step?
Instant credit. The ability to buy now and pay later (BNPL). What do you need if you want to offer immediate credit like this? The ability to run an instant credit check. With Apple Pay, and now the immediate credit checking from Credit Kudos, it should be possible to walk into a store, select the buy now pay later option, tap your phone, and then leave immediately. Getting credit becomes as easy and fast as a regular payment.
Most of the BNPL offers are arranged by retailers with companies such as Klarna. What Apple could be about to do is bypass all this and integrate a BNPL option directly into the payment system.
If my assumption is correct - and they make this work - then it is going to be a major development for Apple. Long thought of as a hardware and device company they are now making a significant amount of revenue from services - including financial services.
The logical next step will be for Google to plan a similar service in Android, but as we increasingly use our phones for payment and credit, where are the traditional payment companies and even the card companies? Are they all going to miss out as we no longer need to carry a wallet full of cards around?
Let me know what you think about the Credit Kudos purchase. Do you think BNPL is the likely outcome of this? Get in touch directly via my LinkedIn.
