I think the article is mixing up banking with payment processing (payment processing is an important but small part of retail and wholesale banking).
Retail banks make most of their money by charging for loans - either individual overdrafts, personal loans or coporate loans. For apple to be a profitable bank they would have to start assessing businesses and individuals for creditworthiness. It seems quite far from their current business model and not obvious why they would want all the regulatory oversight that comes with it.
Well, if not a bank something like VISA.
They wont.
But that's about Apple Pay transactions, which are logged into their central servers anyway, and will be given to the government when asked, as all banks do.
This is not about data on Apple Pay transactions, but about Apple Pay's security itself.
You wouldn't use an easily compromisable phone as your be-all-end-all wallet, the same way you wouldn't use an insecure banking portal.
Wherever they are logged, they will be available to the government -- Apple doesn't care about those data, but about the security of Apple Pay.
I think the real reason for Apples worry is that they want people to trust the smartphones for way more then just payments, for instance Health information. And people might just end up much more reluctant to do so if they know the phones are easily hackable.
Author's claim was that they defend security of their platform to outcompete other payment processors on fraud insurance costs.
Obviously because the whole point of the article is not to merely echo the sentiment, but to attempt a guess at the reasons behind it.
He's arguing that the FBI backdoor would introduce an unacceptable backdoor into a hypothetical Apple "Bank" which bad guys could exploit.
Not sure I agree with that argument either, but it is orthogonal to your valid point about know-your-customer.
"And this is why Tim Cook is willing to go to the mattresses with the US department of justice over iOS security: if nobody trusts their iPhone, nobody will be willing to trust the next-generation Apple Bank [...]"
All the author is talking about is a general perception of trust, not any actual backdoor.
> I'm going to assume you know what Apple Pay is: you use your iPhone, iPad, or Watch as a trusted, authenticated identity token in a shop to pay for stuff. It ties into your bank account and basically your phone swallows your debit and credit card.
I thought that was fairly explicit. If the phone (or watch...) is going to be the primary tool of payment than its security is paramount. Apple wants at least the same level of protection against tampering as the chip inside a modern credit card.
1. https://en.wikipedia.org/wiki/Linksys_iPhone
2. http://www.networkworld.com/article/2295551/network-security...
3. https://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer#1...
4. https://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer#2...
5. https://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer#2...
Only for the FBI/law enforcement though. A backdoor has no such restrictions, making a backdoored iPhone vulnerable to attacks by black hats.
If Apple were to become a bank, I don't see how they would get around those regulations. In fact, I'm pretty sure that once Apple were to become a major financial institution, the authorities would certainly ask for access to data on financial flows -- and given the state of legal affairs, might have a much stronger case.
(Remark: I'm sceptical about Apple wanting to become a bank being the reason for the Apple vs. FBI conflict. I think it is nonetheless plausible for Apple to become a bank.)