Should you buy Apple for its Fintech ambitions?

apple (AAPL -0.98%) is best known for its iPhones and other sleek and innovative devices. While it continues to generate most of its sales from its hardware business, the tech giant has been looking to expand its services segment for years.

One particular area where Apple is making progress is the financial industry. And recent developments seem to highlight the importance of Apple’s ambitions in this field. Let’s take a closer look at Apple’s latest move in this area and what it could mean for long-term investors.

Apple strengthens its financial services portfolio

Apple already offers several key financial services, including Apple Pay, a leading digital wallet accepted by more than 85% of retailers in the US. The company also offers a credit card called the Apple Card issued by Goldman Sachs. Also, Apple’s recently rolled out Buy Now Pay Later (BNPL) service allows users to split payments over several weeks with no interest or fees.

But on April 17, the tech giant officially launched a new high-yield savings account for Apple card users. This savings account comes with no fees, no minimum deposit and a competitive 4.15% annual percentage rate (APY) that the company says is 10 times higher than the national average, among other attractive features.

Note that the APY on this savings account can change at any time, but at its current level, it makes Apple’s new service attractive to consumers who already have an Apple card, especially if they are satisfied users. On that front, the company has nothing to worry about.

In August, the Apple Card took the top spot for satisfaction for the second consecutive year among credit cards in its category. In light of that, it seems somewhat likely that at least some Apple cardholders will be on board with the company’s new offering.

The bigger picture

Apple’s new savings account highlights once again that the company is serious about investing in financial services. From Apple Pay to the BNPL service, it continues to add new offerings in this space, and we have every reason to believe it’s not done yet. Apple’s hardware service remains the most important. And its financial services unit makes up only a small fraction of the services segment. So it’s probably not a good idea to buy the company’s stock for this reason.

But there’s an even more critical point: Apple has a track record of pursuing lucrative opportunities with a long runway for growth. Such is the case with Apple Pay — the world is increasingly moving to digital payment methods, a trend that may continue for some time, due in part to the rise of e-commerce. There are examples in other areas as well.

For example, the company recently reported progress on adding non-invasive continuous blood glucose monitoring to the Apple Watch. There are 422 million diabetes patients worldwide, a number that is expected to continue to grow for some time. Elsewhere, Apple is working on an augmented reality (AR) headset that it could roll out later this year.

The AR market is also in an upward trend, another long-term opportunity for Apple. With an installed base of more than 2 billion devices worldwide and massive cash flow generation, currently at $97.5 billion, Apple has the wherewithal to invest in new ventures. Not all of them will pay off, but enough of them will enable the company to continue delivering solid financial and stock market results.

Apple also uses its huge pile of cash to reward shareholders in other ways, most notably as an excellent dividend stock. The company has raised its payout by 111.1% over the past decade, and its low cash payout ratio of 15.3% suggests plenty of room for more dividend increases. Beyond the growing financial services segment, these are much better reasons to buy shares of Apple.