Apple (NASDAQ:AAPL) stock has been making headlines for launching a savings account that sports a competitive 4.15% interest rate. Undoubtedly, the latest product offering to come from Apple’s fintech push comes at a pretty exciting time, at least through the eyes of a potential market disruptor. As Apple wanders deeper into financial services with its disruptor hat on, it’s hard to be anything but bullish on the firm.
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U.S. Regional Banks Feel Pressure. Apple May Be Seeing an Opportunity
The U.S. banks have been under a lot of selling pressure for well over a month now. Indeed, it all started with SVB Financial’s failure. As other regionals fell under the weight of the Fed’s interest rate hikes, a full-blown U.S. regional banking crisis came to be. Bad bond investments eroded depositor confidence, eventually paving the way for a bank run.
It’s difficult to tell when this pressure hurting the regional banks will be contained. Over a span of a month and a half, we’ve witnessed the second, third, and fourth-largest bank failures in U.S. history. After such a wave of failures, it’s no mystery why some depositors feel a bit on edge. While larger U.S. banks have mostly been steady in this storm, they too could stand to lose a bit as depositors look to consider alternatives.
Of course, there have always been fintech firms, neobanks, and smaller financial institutions that have offered highly-competitive rates on deposits. That said, never before has there been a respected, consumer-centric behemoth of a firm like Apple getting in on the financial services space. Apple’s a $2.65 trillion company that many tech-savvy users already trust day-to-day with their data. For many Apple users, this trust has been built for well over a decade.
When it comes to financial services, trust and reliability play a massive role in where depositors or investors choose to take their business. Of course, competitive rates always help, but they’re not always the determining factor. With Apple pulling the curtain on its high-rate savings account, I think the firm could stand to win a lot of business as confidence in banks takes a modest blow with every regional bank that goes down.
Apple and Goldman Could Continue to Make Moves in Consumer Banking
Apple may be a relative newcomer to the financial services space, but it has all the tools it needs to thrive. With a bit of help from Goldman Sachs (NYSE:GS), I believe Apple is the one firm that could upend the financial industry as we know it. Undoubtedly, the business of banking can be profitable, but it can also be wildly turbulent when the tides turn. With Apple teaming up with Goldman (and perhaps other banks in the future), the firm may find itself with the ability to enjoy more of the feast to be had within financial services minus potential indigestion.
At this juncture, many depositors may be inclined to take money out of those sub-2% savings accounts and stash it with Apple, where they can make more than double the interest.
Reportedly, 69% of Apple Card holders expressed interest in opening up a savings account. Younger consumers, specifically those in the Millennial and Gen Z cohort, may be inclined to get an Apple Card if it means gaining excess to such a competitive savings account.
According to a report conducted by Forbes, Apple’s high-yield savings account brought in nearly $1 billion worth of deposits in just four days. That’s impressive.
Apple has a competitive rate, a reputation built on decades of trust, and a brand that’s virtually impossible to match. It’s no mystery why Apple’s foray into banking has been met with such profound early success.
Is AAPL Stock a Buy, According to Analysts?
Turning to Wall Street, AAPL stock comes in as a Strong Buy. Out of 25 analyst ratings, there are 21 Buys, three Holds, and one Sell recommendation. The average Apple price target is $177.23, implying upside potential of 5.8%. Analyst price targets range from a low of $120.00 per share to a high of $205.00 per share.
The Bottom Line on Apple Stock and Its Fintech Push
Apple has always been about doing things better than the competitors it seeks to go up against. As select banks face a crisis of confidence, I’d look for more people to take their money over to Apple, not just for the higher rate but for greater convenience and more peace of mind.
Going into earnings, I’d look for more details about Apple’s fintech push. Even if the quarterly results fail to impress, commentary on Apple’s direction could be a needle-mover for the stock.
