Goldman Sachs, Apple’s banking partner for its high-yield credit cards and savings accounts, apparently has doubts about those products. According The Wall Street JournalGoldman is looking to exit the consumer lending business, which could have implications for Apple Card and the associated savings account.
The report suggests that several top Goldman executives want the company to divest its remaining consumer loan products: those it offers with Apple and the General Motors credit card. No final decision is said to have been made, although the future of Goldman’s consumer products may become a little clearer when the financial company reports its quarterly earnings on Tuesday.
Consumer lending efforts, like the Apple Card, may have been a mistake for Goldman. The business unit that oversees them and GreenSky (a “buy now, pay later” company that Goldman bought for about $2.2 billion last year and is selling at a loss) has lost billions of dollars.
Meanwhile, Goldman has run afoul of regulators. The Consumer Financial Protection Bureau has investigated Goldman’s management of credit card billing errors and refunds. Unlike other card programs, Apple Card bills go out at the beginning of each month. This is said to put more pressure on Goldman’s customer service workers who deal with complaints and billing issues. Continuous ticketing can alleviate that tension. However, Goldman has reportedly failed to convince Apple to move to a more typical billing cycle.
If Goldman is unable to reduce its credit card charges, it could try to sell the partnerships between Apple and GM, according to the report. This can be a difficult prospect, given that customers have deposited billions of dollars into Apple savings accounts. If Goldman can get another bank to take over the Apple partnership (including those hefty savings accounts), the Diary He noted that the finance company may have to raise costly emergency funds to cover any shortfalls.
Goldman is said to have held talks with American Express about acquiring its consumer products. However, Amex is reportedly concerned about Apple Card loss rates and other factors that Goldman has been trying to remedy. Amex leaders are also said to have been angered by the fact that the Apple Card operates on the Mastercard network.
