Apple has ended its fintech partnership with Goldman Sachs. Are we surprised? Not at all.
Before we explore the clear signs of their deteriorating relationship, let’s talk about what we know so far. According to the Wall Street Journal, Apple intends to end its partnership with the Wall Street Bank, as per information from “people briefed on the matter.
Apple Card and Goldman Sachs Are Parting Ways
WSJ reported that the termination covers the “complete consumer partnership” of the duo, encompassing the Apple Card and the Apple Savings Account.
Once again, we’re not surprised. We’ve always sensed there was trouble in paradise.
Three Signs Indicated a Fractured Relationship Between Apple and Goldman Sachs
In April, Apple introduced the Apple Savings Account, enticing users with an appealing 4.15% interest rate to join the Apple Card. Approval for an Apple Card is a prerequisite for setting up an account.
Having both an Apple Card and an Apple Savings Account, my experience with Goldman Sachs has been a headache. It’s understandable that Apple might be cautious about continuing its dealings with Goldman Sachs.
There are reports of Goldman Sachs Having Unreliable Customer Service
In early June, WSJ reported that certain customers faced challenges withdrawing funds from their Apple Savings Account. They asserted that the money appeared to vanish for several weeks after the transfer.
Fortunately, everyone mentioned in WSJ’s report eventually recovered their money, though the process was unusually prolonged.
The Information states that Apple takes charge of designing the iPhone wallet app UI, crafting a stylish titanium card, and implementing various sleek features in the partnership. Meanwhile, Goldman predominantly manages customer service, underwriting, transactions, and other banking tasks, but evidently, some customers aren’t pleased with Goldman’s performance.
It’s important to highlight that many customers have had positive experiences with the Apple-Goldman Sachs partnership. In 2021, Apple revealed that Apple Card customers rated Goldman Sachs and Apple Card as the top choice for customer satisfaction in the mid-sized credit card market.
Yet, the issues reported in the media arguably tarnished Goldman Sachs’ reputation.
Goldman Sachs is Losing Money
In a mid-October report by WSJ, it’s not only Apple expressing dissatisfaction in this partnership. The article mentioned, in part, that some senior executives at Goldman Sachs wish to exit the remaining part of consumer lending, namely, the Apple credit card.
Additionally, Goldman disclosed that its Platforms Solutions unit, encompassing businesses like Apple Card, incurred a $1.2 billion loss in only nine months.
Within the bank, partners gripe that the consumer-lending business has caused more problems than it’s worth, and they attribute Goldman’s expansion in the space to [CEO David Solomon],” as reported by WSJ.
As a result, reports indicate that Goldman Sachs has been eager to part ways with Apple. This leads to my next point.
Reportedly, Goldman Sachs Wanted to Sever Ties With Apple
In late June, WSJ reported that Goldman Sachs had discussions with American Express about terminating its partnership with Apple.
However, Apple was not in the dark about this. The report disclosed that the Cupertino-based tech giant was well aware that Goldman Sachs was eager to part ways.
Now, it appears that Goldman Sachs’ reported desire for independence has been fulfilled. As mentioned earlier, Apple is reportedly ending its deal with Goldman Sachs.
This marks a complete turnaround from just a year ago when Goldman Sachs announced a partnership extension through 2029.
It remains unclear whether Apple has secured a replacement issuer for Goldman Sachs.