Apple's success over the years is not just down to the devices that it has placed into our hands, but on the positive disruptive force that it has exerted across a range of traditional industries, and the resulting changes in consumer behaviour that these have caused.
So when Apple enters a new market, the existing big beasts of that industry need to sit up and take notice. With the launch of Apple Pay on Monday, it is the banks that need to work out how they can remain relevant in the face of the technology giant.
Don't get me wrong – Apple Pay doesn't look like it will kill off the banks. As it stands now, the new service is about using smartphones' in-built NFC technology to make retail purchases by tapping the device to wireless terminals in stores. That may not sound like a threat to banks, and if it were merely a case of replacing outmoded plastic with tap-and-pay, then they would be able to sleep easy.
Apple's innovations have made it necessary for traditional businesses to respond so that they can adapt quickly to the public's new behaviours and expectations. There's no reason to think that it will be any different with Apple Pay, and that the iPhone will soon become the only device that users need to manage their entire financial affairs. After all, there are plenty of apps and tools for paying bills or transferring money to friends, which makes up the vast majority of transactions that most people need on a day-to-day basis.
Given how the proliferation of such simple, intuitive financial tools is encroaching on the traditional functionalities of dedicated banking apps, banks need to ask how they can keep their customers engaged with their own apps and ensure that they remain relevant to the smartphone generation. If they don't, then how will they be able to connect with and be relevant to their customers, ensure they stay loyal and effectively sell them new products or services? Furthermore, banks risk missing out on the rich user data that mobile generates, which instead enable rival providers to help them improve their own services.
It would be a great shame if banks were to become less relevant to the smartphone generation. As the recent recession has shown, the certainties of the last century have been swept away; the financial future is full of uncertainties, and banks have a critically important role to play in advising the young how they can best negotiate the future.
Many traditional High Street banks have already taken important steps to push more digital services to users, sometimes in novel ways. For example, HSBC announced in May that it's offering free Wi-Fi initially in 650 branches across the UK to encourage mobile banking. But banks still need to do more if they are to keep up with innovations from digital-native competitors.
Well, while it may seem paradoxical, banks can best adapt themselves by playing to their traditional strengths. After all, banks don't just exist to enable payments. Aside from the wide range of pensions, loans and savings services, banks play a vital role in educating and advising their customers. One of the many regrets of the Baby Boomers is the virtual extinction of the traditional bank manager – a flesh-and-blood person with whom you could establish a one-on-one relationship. While it's unlikely that the physical bank manager will see a return, mobile apps seem like the best possible replacement.
With a wide spread of functionalities, better communication and more personalisation (largely enabled through rich mobile data), banks can provide services and useful advice that no Internet start-up or long-established technology giant can rival. Apps clearly have a crucial role to play in keeping banks relevant to their customers, of maintaining loyalty and thus reducing churn in an already hyper-competitive market.
There is, however, another factor that banks need to consider when they are developing their app strategy, which is how they can compete with the user experience that is inherent to services such as Apple Pay. It is especially challenging for most banks to deliver this level of performance and reliability, and the number of well-publicised glitches to big-brand banking app is an ill omen for the banks future success in this area.
Customers expect banking apps to be reliable regardless of time, location or device. Our recent research indicates that app users expect a first-class service, one that goes above and beyond that of the traditional branch banking. As an example, 84 percent of people we surveyed have deleted or uninstalled at least one mobile app because of problems with its performance. Looking at banking specifically, a shocking three in ten would change banks if a mobile app wasn't up to scratch.
To achieve this expected level of performance, banks must ensure customers have 24/7 access to key services, whether it be through proactively predicting when their applications will experience surges in traffic or spotting and fixing glitches as soon as they occur.
While Apple alone won't make traditional banking obsolete, the banks themselves need to ensure that they stay relevant in a fast-changing environment. The return of the personalised bank manager – albeit in the form of an app – offers the best opportunity of warding off the challenge posed by the plethora of financial upstarts.
Tom Levey is technology evangelist at AppDynamics