Data Dive

The New Beginnings Edition: Apple, Uber And Goldman Sachs

Though you might not realize it looking at a weather forecast in various parts of the nation – as it seems the temperature might never actually break 40 degrees – spring is upon us; the season for new beginnings is here.

Even if the weather refuses to play nicely, at least we can count on the payments and commerce ecosystem to snap to life with some resets and fresh starts.

In bloom this week…

Apple’s New Chip Groove

Last week’s reports suggest that Apple will soon wave goodbye to its long-term chipmaker, Intel, in favor of making its own chips for Mac computers.

The change, according to sources, could be online as early as 2020.

The transition, which has reportedly been code-named Kalamata, remains in its infancy – though the broad stroke is said to have been approved by Apple’s executive leadership. The goal is to bring all Apple products into alignment in an attempt to make them work more smoothly, similarly and seamlessly in tandem.

Because of the scale of the change, it seems the transition will happen over a number of phases and stages.

If it actually comes to fruition, the loss of Apple could take a fairly big bite out of Intel’s bottom line, as Apple currently represents roughly 5 percent of its annual revenue. The announcement that Apple was considering going its own way, chip wise, was enough to send Intel shares tumbling 6.1 percent early last week, despite Apple neither confirming nor denying the rumor.

Stifel analyst Kevin Cassidy said in a note that he believed the market was “overreacting” to the report. “We do not expect any other PC manufacturers will consider designing their own CPUs,” he wrote, according to Reuters.

Others noted that the phase-out of Intel chips will take some time, which will give Intel ample opportunity to adjust.

“While it’s possible that Apple may replace Intel in some of its lower-end product lines, we think it will be difficult for Apple to completely replace Intel by 2020, especially on its higher-end offerings,” said Summit Insights Group analyst Kin Ngai Chan.

The change would make Apple the only computer maker to use its own processors, as Dell Technologies, HP, Lenovo Group and ASUS Computers all use Intel chips.

“We think that Apple is looking at ways to further integrate their hardware and software platforms, and they’ve clearly made some moves in this space, trying to integrate iOS and macOS,” said Shannon Cross, an analyst at Cross Research. “It makes sense that they’re going in this direction. If you look at incremental R&D spend, it’s gone into ways to try to vertically integrate their components so they can add more functionality for competitive differentiation.”

Uber Drivers’ New Debit Option

Uber last week officially announced the launch of its Uber Visa debit card from GoBank – a product designed exclusively for drivers and delivery partners. The card offers users no minimum balance requirement, no overdraft fees and no monthly or annual fees, along with rewards for everyday spending on gas and groceries.

According to reports, those rewards will allow Uber drivers to opt-in for exclusive discounts or cash back, depending on where and how the card is used. For example, drivers who get gas at an ExxonMobil station can look forward to 3 percent cash back if they use their PIN at the pump. Drivers also get 1.5 percent cash back at all other gas stations and 2 percent cash back at Walmart for in-store and online purchases.

Discounts also include 15 percent off select automotive maintenance services at Jiffy Lube, 10 percent cash back for auto part purchases at Advance Auto Parts and participating Carquest Auto Parts locations and 8 percent cash back when they use the card to pay their monthly Sprint bill or make purchases in Sprint stores.

“People tell us they drive with Uber to earn on their own terms. The Uber Visa debit card and checking account offers a simplified banking solution that helps people who partner with Uber keep more of what they earn and earn more for what they spend — on and off the road,” Uber said of the payment card release.

Uber isn’t the only ridesharing firm rolling out a branded debit or credit card. The Wall Street Journal reported last summer that Lyft, Uber’s rival, is also working on launching a payment card of its own.

Goldman Gets Into Commercial Banking

Goldman Sachs is apparently eyeing an entrance into the commercial banking market – and has hired a senior engineer at JPMorgan to help them do it.

Citing people familiar with the plans, The Wall Street Journal reported that senior engineer Hari Moorthy was hired to develop cash management tools, account deposit tools and other financial products geared at large companies, much as he did in his former post at JPMorgan.

Commercial banking is a new pursuit for Goldman, which is best known for its role in advising on mergers and helping companies raise capital. But Goldman Sachs has been pushing for growth of late, and expanding into new markets. That has included the launch of its consumer lending arm – Marcus – and its expansion into product financing with Apple.

Commercial lending is another expansion avenue in search of a new revenue stream for the bank, though that is already a crowded and competitive market. Goldman will face direct competition from a host of established players, including JPMorgan, Citigroup, Bank of America and Wells Fargo – and those are just the leading players. They have the know-how and infrastructure to help businesses with their cash management – and they are well-established. According to reports, half of JPMorgan’s $1.2 trillion in deposits are from businesses, and it made $4.1 billion in revenue from commercial loans in 2017. That was on top of another $3.4 billion from cash management and treasury services, according to the WSJ report.

It’s clearly a high-revenue market – if Goldman can crack it.

But trying new things and going after new territory was the seasonally appropriate theme of the week – whether one was chasing payments, CPUs or an enterprise-size business partner.

What will germinate and take root? We’ll watch the payments and commerce garden and keep you posted.

Have a good week! Stay warm!

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The PYMNTS Next-Gen AP Automation Tracker, is a monthly report that highlights the most recent accounts payable developments and automated solutions that are disrupting how businesses process invoices, track spending and earn rebates on transactions.

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