So just what in the heck is Apple doing producing the iPhone SE? They already have phones that are bigger, brighter, and have better features. Are there that many Donald Trumps with tiny hands out there just waiting to buy an iPhone if only it was smaller? No, thankfully there aren’t a whole bunch more of The Donalds. Sure there are a some people, like my wife, who have smaller hands and miss the inherent cuteness of the iPhone 4, but she was perfectly happy with her iPhone 6 until it leapt out of her pocket and into the Caribbean Ocean. Again, people with loose pockets are not the market either.
So what the heck is Apple doing? Good business, that’s what. The media complained that the iPhone SE was a predictable and boring announcement. Somehow these Fanboys and Fangirls missed the point. They aren’t trying to cannibalize themselves by downgrading iPhone owners to a smaller and cheaper phone. I am perfectly happy with my iPhone 6S Plus with 128gb of memory that I am unlikely to ever max out, thank you very much. I have no interest in guns, but you’d have to pry this phone from my cold, dead hand.
So what do you do when you sell high-end smart phones and the Chinese economy is cratering and low oil prices are crippling the B and R of the BRICs, the supposed four horsemen of growth? Your shareholders aren’t going to give you a pass. They aren’t going to say, “China is sucking wind and Brazil and Russia are in free fall, so take a growth holiday.” Quite the contrary. They are going to say, “Despite the economic headwinds, Mr. Cooke, how are you going to make us money?”
When the going gets tough, the best and brightest come up with a new offer and steal marketshare from others. If you’ve been trying to convince your friends unsuccessfully that your Android phone is cool despite its confusing, and to my view, unusable interface, this phone is for you. If you wanted an iPhone but didn’t want a contract, this phone is for you. If you want the iPhone experience, but can’t pay for it up front, this phone is for you. And yes, unfortunately, if you are a floppy haired narcissist with small hands, this phone is for you. Are these people who don’t have a cell phone at all and have a tin can with a string bulging out of their back pockets at the ready in case they need to make a call? No. Apple is giving a better experience to those who previously thought the iPhone was too expensive. The target market all had phones, just not iPhones. They are stealing share to grow and giving shareholders what they expect. Full disclosure, as a shareholder, I am delighted.
Banks are in the same predicament, but the response seems to be different. “Woe is us, the interest rate isn’t moving as fast as it was expected to,” the mantra goes. “We won’t be able to grow this year.” Certainly no one in the C-suite of a major bank is saying this and no bank shareholder is either. Unto this self-pity, I say bullshirt. The kind bulls wear to rodeos. It’s time to dig deep like Tim Cooke and team and give the C-suite and shareholders what they want. It is in these crucibles of uncertainty where careers are made.
So for the industry I serve every day, it’s not time for a Roman Holiday; it’s time to get cracking. As you’ll note, no one has hung up the sneakers at the Alternative Finance company you’ve been tracking and, quite frankly, they’d be delighted if you took your eye off the ball. Let’s do the opposite. Let’s get more innovative than ever with our offers. Let’s understand our customers better to know what combination of features and price would entice them, keep them, or increase their share of wallet with us. In short, let’s find our SE.
At Nomis, being a Fintech, we love these moments and live to get cracking. We help banks better understand their customers and prospects so that they can produce better offers and deliver the right price to the right person. It doesn’t matter if the interest rate is 100 basis points or 500 basis points, getting the right offer to the right person who values what you are offering is the name of the game. Blindly raising a rate is an easy, but costly, way to achieve this, and it is usually not the financially prudent way to gain share and can be a zero sum game as far as profit is concerned.
The iPhone SE is not a boring announcement for an investor, and I am sure they are celebrating a coup at Apple headquarters in the C-suite. If I was Tim Cooke, I’d be doing a little jig or a victory lap around my massive desk. At Nomis we’d love more than anything for every bank to find their SE. And when you are ready to, we’ll be there to help you identify the customers that want it. Contrary to the unfortunately prevailing sentiment that without steady rate increases there isn’t much to do, this is actually your time to shine, bankers. It’s times like these where we really show what we’re made of. Channel your inner Apple.