Hostname: page-component-cd9895bd7-gbm5v Total loading time: 0 Render date: 2024-12-25T19:30:51.270Z Has data issue: false hasContentIssue false
  • English
  • Français

The Appleization of finance: Charting incumbent finance's embrace of FinTech

Published online by Cambridge University Press:  09 November 2023

Reijer Hendrikse ,
David Bassens  and
Michiel van Meeteren
Reijer Hendrikse*
Affiliation:
Vrije Universiteit Brussel, Belgium
David Bassens
Affiliation:
Vrije Universiteit Brussel, Belgium
Michiel van Meeteren
Affiliation:
Vrije Universiteit Brussel, Belgium
*
Corresponding author: Reijer Hendrikse, Vrije Universiteit Brussel, Cosmopolis: Centre for Urban Research, Department of Geography, Pleinlaan 2, 1050, Brussels, Belgium. Email: reijer.hendrikse@vub.be
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

The rise of financial technology (FinTech) engenders novel business models through integrating financial services and information and communication technologies (ICT). Digital currencies and payments, data mining, and other FinTech applications threaten to radically overhaul the financial sector. This article argues that, while we are becoming aware of how technology giants such as Apple Inc. are making inroads into financial services, we need to become more sensitive to how financial incumbents mimick ICT firms while aiming to neutralize the FinTech challenge. Practices from Silicon Valley are spilling over into ‘traditional’ finance through a process we dub Appleization. We illustrate how incumbents aim to remain indispensable amidst rapid digitization. Mimicking tech strategies, financial incumbents resort to transforming legacy ICT systems into integrated platforms, cultivating entrepreneurial ecosystems where startups are ‘free’ to compete whilst effectively being locked into the incumbent's orbit. We illustrate this by comparing Apple's business features (locking-in developers, customers and state into a hybrid business model based on a synergy between hardware, software and data-driven platform components) with emerging practices in the financial industry. Our analogy suggests that the Appleization of finance might radically transform, yet not undercut the oligopolistic position of financial incumbents.

Keywords

FinTechfinancial innovationplatform capitalismentrepreneurial ecosystem
Type
Article
Information
Finance and Society , Volume 4 , Issue 2 , 2018 , pp. 159 - 180
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits noncommercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© 2018 The Author(s)

References

Accenture (2016) Beyond the everyday bank: How a GAFA approach to digital banking transformation will increase revenues, improve customer engagement, while reducing the cost base. Available at: <https://www.accenture.com/t20160502T051308Z_w_/us-en/_acnmedia/PDF-10/Accenture-Banking-Beyond-Everyday-Bank-pdf.pdf#zoom=50>. Accessed 3 October 2017..+Accessed+3+October+2017.>Google Scholar
Amin, A. and Thrift, N. (1992) Neo-Marshallian nodes in global networks. International Journal of Urban and Regional Research, 16(4): 571–587.CrossRefGoogle Scholar
Bajarin, B. (2011) Why competing with Apple is so difficult. Time Magazine, 1 July. Available at: <http://techland.time.com/2011/07/01/why-competing-with-apple-is-so-difficult/>. Accessed 2 February 2018..+Accessed+2+February+2018.>Google Scholar
Barker, A. and Beesley, A. (2016) Apple hit with $13bn EU tax penalty over illegal Irish aid. Financial Times, 30 August. Available at: <https://www.ft.com/content/b573ac02-6e90-11e6-a0c9-1365ce54b926>. Accessed 6 December 2016..+Accessed+6+December+2016.>Google Scholar
Bassens, D. and Van Meeteren, M. (2015) World cities under conditions of financialized globalization: Towards an augmented world city hypothesis. Progress in Human Geography, 39(6): 752–775.CrossRefGoogle Scholar
Bergvall-Kareborn, B. and Howcroft, D. (2013) The Apple business model: Crowdsourcing mobile applications. Accounting Forum, 37(4): 280–289.10.1016/j.accfor.2013.06.001CrossRefGoogle Scholar
Birch, K. (2017) Financing technoscience: Finance, assetization and rentiership. In: Tyfield, D., Lave, R., and Randalls, S. (eds.) The Routledge Handbook of the Political Economy of Science. London: Routledge, 169–181.CrossRefGoogle Scholar
Brunsdon, J. (2016) New EU laws legitimise fintech challengers. Financial Times, 26 September. Available at: <https://www.ft.com/content/3803914a-6eba-11e6-a0c9-1365ce54b926>. Accessed 6 December 2016..+Accessed+6+December+2016.>Google Scholar
Buzzachi, L., Colombo, M., and Mariotti, S. (1995) Technological regimes and innovation in services: The case of the Italian banking industry. Research Policy, 24(1): 151–168.CrossRefGoogle Scholar
Carney, M. (2017) The promise of FinTech - something new under the sun? Speech given at Deutsche Bundesbank G20 conference on ‘Digitising finance, financial inclusion and financial literacy. Wiesbaden, 25 January. Available at: <http://www.fsb.org/wp-content/uploads/The-Promise-of-FinTech—Something-New-Under-the-Sun.pdf>. Accessed 19 December 2017..+Accessed+19+December+2017.>Google Scholar
Castells, M. (2000/1996) The Rise of the Network Society. Chichester: Wiley.Google Scholar
Chappuis Halder (2016) GAFA and the financial services. Chappuis Halder Monthly Digital Newsletter, 19 August. Available at: <http://fintank.net/newsletter/gafa-the-financial-services/>. Accessed 3 October 2017..+Accessed+3+October+2017.>Google Scholar
Claerhout, P. and Leijnse, B. (2015) SmartFin wil Fintech Valley uitbouwen in België. Trends, 23 April.Google Scholar
Clot, A. and Pailhon, J.M. (2016) La (French) FinTech connection. In: Chishti, S. and Barberis, J. (eds.) The FinTech Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries. Chichester: Wiley, 45–47.CrossRefGoogle Scholar
Cockerton, C. (2016) Nurturing new FinTech communities. In: Chishti, S. and Barberis, J. (eds.) The FinTech Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries. Chichester: Wiley, 42–44.CrossRefGoogle Scholar
Cooke, P. (2001) New economy innovation systems: Biotechnology in Europe and the USA. Industry and Innovation, 8(3): 267–289.CrossRefGoogle Scholar
Corea, F. (2015) What finance can learn from biopharma industry: A transfer of innovation models. Expert Journal of Finance, 3: 45–53.Google Scholar
Dahlander, L. and Gann, D.M. (2010) How open is innovation? Research Policy, 39(6): 699–709.CrossRefGoogle Scholar
Dapp, T. (2015) Fintech Reloaded: Traditional Banks as Digital Ecosystems. Frankfurt: Deutsche Bank.Google Scholar
Deloitte (2017) A Tale of 44 Cities: Connecting Global FinTech. GFHF Interim Hub Review, April 2017.Google Scholar
DiMaggio, P. and Powell, W. (1983) The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2): 147–160.CrossRefGoogle Scholar
Dillet (2016) iOS 10 preview: Apple breaks down its walled garden. TechCrunch, 7 July. Available at: <https://techcrunch.com/2016/07/07/ios-10-preview/>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Drucker, J. and Bowers, S. (2017) After a tax crackdown, Apple found a new shelter for its profits. New York Times. 6 November. Available at: <https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html>. Accessed 19 December 2017..+Accessed+19+December+2017.>Google Scholar
EBA (2017) Discussion paper on the EBA's approach to financial technology (FinTech). European Banking Authority, 4 August. Available at: <https://www.eba.europa.eu/documents/10180/1919160/EBA+Discussion+Paper+on+Fintech+%28EBA-DP-2017-02%29.pdf>. Accessed 19 December 2017.. Accessed 19 December 2017.' href=https://scholar.google.com/scholar?q=EBA+(2017)+Discussion+paper+on+the+EBA's+approach+to+financial+technology+(FinTech).+European+Banking+Authority,+4+August.+Available+at:+.+Accessed+19+December+2017.>Google Scholar
ECB (2017) Guide to assessments of fintech credit institution license applications. European Central Bank, September 2017. Available at: <https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/licensing_and_fintech/ssm.guide_on_assessment_for_licensing_of_fintech_credit_insts_draft.en.pdf>. Accessed 19 December 2017..+Accessed+19+December+2017.>Google Scholar
The Economist (2015) The FinTech revolution. 9 May. Available at: <http://www.economist.com/news/leaders/21650546-wave-startups-changing-financefor-better-fintech-revolution>. Accessed 6 July 2017. The Economist (2017) Financial technology is proving less of a battleground than feared. 6 May. Available at: <http://www.economist.com/news/special-report/21721505-relationship-between-banks-and-technology-companies-becoming-incrincreasingly>. Accessed 19 December 2017..+Accessed+6+July+2017.+The+Economist+(2017)+Financial+technology+is+proving+less+of+a+battleground+than+feared.+6+May.+Available+at:+.+Accessed+19+December+2017.>Google Scholar
Eisenmann, T., Parker, G. and Van Alstyne, M. (2008) Opening platforms: How, when and why? Harvard Business School Working Paper Series, 09-030.CrossRefGoogle Scholar
European Commission (2015) Payment Services (PSD2) - Directive (EU) 2015/2366. Available at: <https://ec.europa.eu/info/law/payment-services-psd-2-directive-eu-2015-2366_en.> Accessed 2 February 2018.+Accessed+2+February+2018.>Google Scholar
Fernandez, R. and Hendrikse, R. (2015) Rich Corporations, Poor Societies: The Financialisation of Apple. Amsterdam: Centre for Research on Multinational Corporations.Google Scholar
Fernandez, R. and Hendrikse, R. (forthcoming) Offshore finance. In: Mader, P., Mertens, D. and Van der Zwan, N. (eds) International Handbook of Financialization. Abingdon: Routledge, in press.Google Scholar
Financial Times (2016) Banks should hire McKinsey, says McKinsey. 15 September. Available at: <http://ftalphaville.ft.com/2016/09/15/2174986/banks-should-hire-mckinsey-says-mckinsey/> Accessed 6 July 2017.+Accessed+6+July+2017.>Google Scholar
Fintech Belgium (2015) Join us and discover the new action plan ‘Digital Belgium’. 25 June. Available at: <https://fintechbelgium.be/2015/06/25/tax-shelter-crowdfunding-for-startups/> Accessed 2 February 2018.+Accessed+2+February+2018.>Google Scholar
Fligstein, N. (2001) Social skill and the theory of fields. Sociological Theory, 19(2): 105–125.CrossRefGoogle Scholar
Fligstein, N. (2002) The Architecture of Markets: An Economic Sociology of Twenty-First-Century Capitalist Societies. Princeton, NJ: Princeton University Press.Google Scholar
Froud, J., Johal, S., Leaver, A., and Williams, K. (2012) Apple business model: Financialization across the Pacific. CRESC Working Paper Series, 111.Google Scholar
Global FinTech Hubs Federation (2016) About us. <http://thegfhf.org>. Accessed 2 February 2018..+Accessed+2+February+2018.>Google Scholar
Ghazawneh, A. and Henfridsson, O. (2013) Balancing platform control and external contribution in third-party development: The boundary resources model. Info Systems, 23(2): 173–192.CrossRefGoogle Scholar
Gillespie, T. (2010) The politics of ‘platforms’. New Media and Society, 12(3): 347–364.CrossRefGoogle Scholar
Ginsel, D. (2016) The journey towards an integrated FinTech ecosystem: The Netherlands. In: Chishti, S. and Barberis, J. (eds.) The FinTech Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries. Chichester: Wiley, 48–50.CrossRefGoogle Scholar
Golumbia, D. (2016) The Politics of Bitcoin: Software as Right-Wing Extremism. Minneapolis, MA: University of Minnesota Press.Google Scholar
Greenfield, A. (2017) Radical Technologies: The Design of Everday Life. London: Verso.Google Scholar
Haslam, C., Tsitsianis, N., Andersson, T. and Yin, Y.P. (2013) Apple's financial success: The precariousness of power in global value chains. Accounting Forum, 37(4): 268–279.CrossRefGoogle Scholar
Hsu, H. (2015) The Appsmiths: Community, Identity, Affect and Ideology Among Cocoa Developers from Next to IPhone. PhD Thesis. Ithaca, NY: Cornell University.Google Scholar
Ingels, J. and De Waele, W. (2017) The road towards a platform economy. Revue bancaire et financière/Bank en Financiewezen, 80(1): 15–19.Google Scholar
IMF (2017) IMF managing director welcomes establishment of high level advisory group on FinTech. IMF Press Release No. 17/84. Available at: <http://www.imf.org/en/News/Articles/2017/03/15/pr1784-imf-managing-director-welcomes-establishment-of-high-level-advisory-group-on-fintech>. Accessed 2 February 2018..+Accessed+2+February+2018.>Google Scholar
Isenberg, D.J. (2010) How to start an entrepreneurial revolution. Harvard Business Review, 88(6): 40–50.Google Scholar
JP Morgan (2018) In Residence, Overview. Available at: <https://www.jpmorgan.com/global/in-residence>. Accessed 2 February 2018..+Accessed+2+February+2018.>Google Scholar
Katz, M., and Shapiro, C. (1994) Systems competition and network effects. Journal of Economic Perspectives, 8(2): 93–115.CrossRefGoogle Scholar
Keizer, G. (2016) Apple's cut of 2015 App Store revenue tops $6BN. Computerworld, 6 January. Available at: <http://www.computerworld.com/article/3019716/apple-ios/apples-cut-of-2015-app-store-revenue-tops-6b.html>. Accessed 6 July 2017.. Accessed 6 July 2017.' href=https://scholar.google.com/scholar?q=Keizer,+G.+(2016)+Apple's+cut+of+2015+App+Store+revenue+tops+$6BN.+Computerworld,+6+January.+Available+at:+.+Accessed+6+July+2017.>Google Scholar
Langley, P. and Leyshon, A. (2017) Platform capitalism: The intermediation and capitalisation of digital economic circulation. Finance and Society, 3(1): 11–31.CrossRefGoogle Scholar
Lazonick, W., Mazzucato, M. and Tulum, O. (2013) Apple's changing business model: What should the world's richest company do with all those profits? Accounting Forum, 37(4): 249–267.CrossRefGoogle Scholar
Lee, P. (2017) Fintech disruptors turn into incumbents. Euromoney, 17 April. Available at: <http://www.euromoney.com/Article/3707376/Fintech-disruptors-turn-into-incumbents.html?platform=hootsuite>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Level39 (2013) About level39 and contact details. 18 March. Available at: <https://www.level39.co/news/level39/>. Accessed 2 February 2018..+Accessed+2+February+2018.>Google Scholar
Linzmayer, O.W. (2004) Apple Confidential: The Definitive History of the Word's Most Colorful Company. San Francisco, CA: No Scratch Press.Google Scholar
Macheel, T. (2017) What JP Morgan is doing with that $9.5 billion tech spend. Tearsheet, 5 April. Available at: <http://www.tearsheet.co/modern-banking-experience/what-jpmorgan-is-doing-with-that-9-5-billion-tech-spend>. Accessed 19 December 2017..+Accessed+19+December+2017.>Google Scholar
Mackenzie, A. (2017) 48 million configurations and counting: Platform numbers and their capitalization. Journal of Cultural Economy, 1-18. doi.org/10.1080/17530350.2017.1393443.Google Scholar
Mandel, E. (1975/1972) Late Capitalism. New York, NY: Verso.Google Scholar
Mannes, J. (2016) Facebook, Amazon, Google, IBM and Microsoft come together to create the Partnership on AI. TechCrunch, 28 September. Available at: <https://techcrunch.com/2016/09/28/facebook-amazon-google-ibm-and-microsoft-come-together-to-create-historic-partnership-on-ai/>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Mazzucato, M. (2013) The Entrepreneurial State: Debunking Public vs. Private Sector Myths. London: Anthem Press.Google Scholar
McKinsey & Company (2015) Cutting Through the FinTech Noise: Markers of Success, Imperatives for Banks. Available at: <http://www.mckinsey.com/industries/financial-services/our-insights/cutting-through-the-noise-around-financial-technology>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Milne, A. (2015) Achieving European policy objectives through financial technology. European Credit Research Institute, 16 November. Available at: <https://www.ceps.eu/system/files/ECRI%20Commentary%20No%2017%20Alistair%20Milne%20Financial%20Technology_0.pdf>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Montgomerie, J. and Roscoe, S. (2013) Owning the consumer: Getting to the core of the Apple business model. Accounting Forum, 37(4): 290–299.CrossRefGoogle Scholar
Perez, C. (2002) Technological Revolutions and Financial Capital. Cheltemham: Edward Elgar.CrossRefGoogle Scholar
PwC (2017a) Redrawing the lines: FinTech's growing influence on financial services. Global FinTech Report 2017. London: PricewaterhouseCoopers.Google Scholar
PwC (2017b) Catalyst or Threat? The Strategic Implications of PSD2 for Europe's Banks. London: PricewaterhouseCoopers.Google Scholar
Rigi, J. (2013) Peer production and Marxian communism: Contours of a new emerging mode of production. Capital & Class, 37(3): 397–416.CrossRefGoogle Scholar
Saxenian, A. (1994) Regional Advantage: Culture and Competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press.Google Scholar
Scott, S. and Zachariadis, M. (2012) Origins and development of SWIFT, 1973-2009. Business History, 54(3): 462–483.CrossRefGoogle Scholar
Semple, C. and Fernandez, L. (2017) BBVA launches its Open Banking business. BBVA, 24 May. Available at: <https://www.bbva.com/en/bbva-launches-open-banking-business/>. Accessed 19 December 2017..+Accessed+19+December+2017.>Google Scholar
Srnicek, N. (2017) Platform Capitalism. Cambridge: Polity Press.Google Scholar
Stam, E. and Spigel, B. (2018). Entrepreneurial ecosystems. In: Blackburn, R., De Clercq, D. and Heinonen, J. (eds.) The Sage Handbook of Small Business and Entrepreneurship. London: SAGE, 407–422.CrossRefGoogle Scholar
Swift (2017) Innovation essentials: In conversation with Sebastien Nunes. Swift, 23 March. Available at: <https://www.swift.com/news-events/news/innovation-essentials_in-conversation-with-sebastien-nunes>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar
Taylor, M. and Oinas, P. (eds.) (2006) Understanding the Firm: Spatial and Organizational Dimensions. Oxford: Oxford University Press.10.1093/oso/9780199260799.001.0001CrossRefGoogle Scholar
Van Meeteren, M. (2008) Indie Fever: The Genesis, Culture and Economy of a Community of Independent Software Developers on the Macintosh OS X Platform. Undergraduate thesis. Amsterdam: University of Amsterdam.Google Scholar
Van Meeteren, M. and Bassens, D. (2016) World cities and the uneven geographies of financialization: Unveiling stratification and hierarchy in the world city archipelago. International Journal of Urban and Regional Research, 40(1): 62–81.CrossRefGoogle Scholar
Van Meeteren, M. and Bassens, D. (2018) Chasing the phantom of a ‘global end game’: The role of management consultancy in the narratives of pre-failure ABN-AMRO. In: Hoyler, M., Parnreiter, C. and Watson, A. (eds.) Global City Makers: Economic Actors and Practices in the World City Network. Cheltenham: Edward Elgar, in press.Google Scholar
World Economic Forum (2015) Executive summary: More than simply David versus Goliath. Future of Financial Services 2015. Available at: <http://reports.weforum.org/future-of-financial-services-2015/executive-summary/>. Accessed 31 October 2016..+Accessed+31+October+2016.>Google Scholar
World FinTech Report (2017) World FinTech Report 2017. Available at: <www.worldfintechreport2017.com>. Accessed 6 July 2017..+Accessed+6+July+2017.>Google Scholar