Goldman Sachs, the banking partner for Apple’s credit card and high-yield savings account, appears to be reconsidering its involvement with these products. According to a report from The Wall Street Journal, Goldman is contemplating exiting the consumer lending sector, which could potentially impact the Apple Card and its associated savings account.
The article suggests that several high-ranking Goldman executives are considering discontinuing their remaining consumer lending offerings, including those in collaboration with Apple and the General Motors credit card. While a final decision has not yet been reached, the fate of Goldman’s consumer products may become clearer when the company reports its quarterly earnings on Tuesday.
Goldman’s foray into consumer lending, including the Apple Card, may have proven to be a costly endeavor. The business division responsible for these products, along with GreenSky (a “buy now, pay later” company acquired by Goldman for approximately $2.2 billion last year and now being sold at a loss), has incurred substantial financial losses.
Additionally, Goldman has faced regulatory challenges, with the Consumer Financial Protection Bureau investigating the bank’s handling of credit card billing errors and refunds. Notably, the billing cycle for Apple Card is different from most other credit card programs, as bills are issued at the start of each month, creating additional pressure on Goldman’s customer service staff who deal with customer complaints and billing issues. While changing to a more standard billing cycle could alleviate this strain, reports indicate that Goldman has been unsuccessful in persuading Apple to make such a change.
If Goldman is unable to reduce expenses associated with its credit card operations, it may explore the possibility of selling its partnerships with Apple and General Motors, a move that could prove challenging given the significant deposits made by customers into Apple savings accounts. In the event that another bank takes over the Apple partnership, including the substantial savings account balances, Goldman may need to secure costly emergency funding to cover any potential shortfalls.
Reports also suggest that Goldman has held discussions with American Express regarding the takeover of its consumer products. However, Amex reportedly has reservations concerning the loss rates associated with the Apple Card and other factors that Goldman has been attempting to address. Additionally, Amex executives are said to have concerns about the fact that the Apple Card operates on the Mastercard network.