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In a surprising turn of events, Goldman Sachs, Apple’s trusted banking partner for its groundbreaking credit card and high-yield savings account, appears to be reevaluating its commitment to these consumer-oriented products. Reports from The Wall Street Journal suggest that the financial giant is considering exiting the consumer lending business, which could have significant implications for Apple Card users and those with associated savings accounts.
According to insider sources, several high-ranking Goldman executives are advocating for a strategic pivot away from consumer lending products. This move would encompass not only the collaboration with Apple but also the partnership involving the General Motors credit card. While a final decision has yet to be made, the fate of Goldman’s consumer products might become clearer when the company unveils its quarterly earnings report this coming Tuesday.
The consumer lending initiatives, including Apple Card, may have proven to be a financial misstep for Goldman. The division overseeing these projects, along with GreenSky, a “buy now, pay later” company acquired by Goldman for approximately $2.2 billion last year and now facing a loss, has incurred substantial losses, reaching billions of dollars.
In addition to financial challenges, Goldman has encountered regulatory hurdles. The Consumer Financial Protection Bureau has closely scrutinized Goldman’s handling of credit card billing errors and refunds. Unlike many other credit card programs, Apple Card bills are issued at the beginning of each month, which reportedly places added pressure on Goldman’s customer service personnel, who grapple with customer complaints and billing disputes. Transitioning to a more conventional billing cycle might alleviate some of these issues; however, it appears that Goldman has not been able to persuade Apple to make this shift.
If Goldman is unable to trim its credit card-related expenses, it might consider divesting itself of the Apple and GM partnerships. This, however, presents a challenging scenario, as customers have entrusted Goldman with billions of dollars in their Apple savings accounts. Finding another financial institution to take over the Apple partnership, along with the substantial savings accounts, could necessitate costly emergency funding for Goldman.
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It has been reported that Goldman has engaged in discussions with American Express about the potential acquisition of its consumer products division. Nevertheless, Amex has expressed reservations regarding the loss rates associated with the Apple Card and other concerns raised by Goldman. Moreover, Amex appears to be concerned about the fact that the Apple Card operates on the Mastercard network, which may not align with its existing strategies.