Financial titan Goldman Sachs has been venturing into new territory in the last few years, specifically the consumer lending sector, partnering with tech giant Apple. However, things haven't exactly panned out as planned.
There is some kind of remorse over Goldman Sachs' association with Apple, and the financial blunders associated with the Apple Card and Apple Savings. Now, the company searches for potential exit strategies. Read more.
Goldman Sachs And Apple
Goldman Sachs is reportedly expressing regret over its partnership with Apple, especially concerning the Apple Card and Apple Savings because the underperformance of these ventures has been significant, with one executive remarking.
The financial titan had invested heavily in consumer lending projects, including the Apple Card, a General Motors credit card, and other ventures.
An Unsuccessful Partnership
From the get-go, the company was hit with accusations of gender bias in credit limit calculations, a claim of which it has since been acquitted. However, the real pain point was the lofty $ 350 that Goldman Sachs shelled out for each new Apple Card user, which resulted in a staggering loss of $ 1.2 billion in 2022.
With the Apple Card bearing most of the blame, tensions between the two corporate giants escalated following investigations into fraud allegations by the Consumer Financial Protection Bureau.
After these complications, Goldman Sachs started contemplating divestment from all consumer-facing collaborations.
The Exit Strategy
Despite initial skepticism, Goldman Sachs rolled out the Apple Savings account in April 2023. Now, rumors suggest that it is considering abandoning this venture as well, and also that there are discussions about selling off all consumer products.
A few executives at Goldman Sachs proposed that Apple assume more responsibility in the partnership, particularly in terms of acquiring new card users. However, this proposal has failed to gain momentum and has not been discussed in high-level meetings.
Several Goldman Sachs executives have pointed fingers at Apple for the Apple Card's woes, such as the issues caused by issuing all bills at the beginning of the month, overwhelming their customer service.
What Comes Next?
Despite Goldman Sachs' pleas, Apple has not yet transitioned to a more manageable rolling date. Moreover, it was revealed in September 2023 that Goldman Sachs and Apple have mutually agreed to forgo the idea of creating a stock-trading investors app.
Time will tell how both companies will navigate this financial downturn and what strategies they will employ to ensure future success.