Goldman Sachs somehow managed to lose money on its stake in the Apple Card business, and American Express was floated as a potential claimant to replace Apple’s issuing partner.
However, a lengthy article from the information It reveals the intricacies of what it might take to change banking partners… plus some good tidbits about Apple.
Why save the best for last? The real gem of the new piece the information is that Apple CEO Tim Cook actually couldn’t get through the application process for an Apple Card before it was announced.
Engineers from the Silicon Valley and Wall Street giant were up all night a few months before its launch, scrambling to find a solution to a problem that cropped up: Tim Cook couldn’t get an Apple Card.
Sure, Cook’s financials are relatively solid, but he’s also a high-profile target for fraud. In the end, Goldman Sachs had to do some behind-the-scenes work to get the Apple CEO issued an Apple Card.
Four people familiar with the matter said Goldman’s underwriting system rejected it as a result. Goldman eventually managed to make a one-time exception, and Cook got his card.
the information It also notes that only the US Apple Card had about 10 million users as of early 2023. Even though Goldman Sachs wants out of the consumer credit business, the investment bank may be stuck with those 10 million customers for a while.
The report casts doubt on the possibility of American Express bailing out Goldman Sachs from the Apple Card:
People familiar with the matter said Apple views American Express as a brand with similar prestige to Goldman. But neither American Express nor JPMorgan Chase, another potential partner, are focused on co-branded cards. Nor are they likely to play a secondary role in the card partnership in terms of branding.
If not Amex or Chase, then who? the information He cites “people familiar with the company’s thinking and potential choices” in reporting that a lesser-known name in banking could take over Goldman’s contract with Apple:
The tech giant could choose a bank big enough to take over Apple Card’s share of Goldman’s $17 billion portfolio of credit cards plus related savings accounts, and it could do whatever was necessary for regulatory reasons but otherwise remain invisible to the customer. Apple could become more involved in aspects of the business that Goldman now runs, such as underwriting decisions, fraud prevention, and customer service.
No matter what comes up with the Apple Card, it doesn’t look like a solution will be reached anytime soon. While the report stresses that Goldman Sachs is unlikely to decide to stick with Apple Card, it also notes the complexity of a transition that could take a year and a half to work out.
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