According to sources quoted by the media, Goldman Sachs is considering exiting its remaining consumer loan business due to poor cooperation with Apple.
Goldman Sachs has traditionally been known for providing advisory services and investment banking services to the wealthy. In 2016, the bank entered the retail banking sector dominated by competitors such as JPMorgan Chase and Bank of America, launching the consumer oriented retail banking unit Marcus, which provides savings accounts, personal loans, and credit card services.
However, Goldman Sachs' retail banking business never achieved profitability, and the bank announced plans to reduce its retail business at the end of last year, but at that time it seemed interested in maintaining a partnership with Apple. In April of this year, Goldman Sachs and Apple jointly launched a new business called Apple Savings, providing users with an annual interest rate of up to 4.15%.
According to insiders, many employees within Goldman Sachs believe that they should not collaborate with Apple to launch savings accounts. Some Goldman executives hope to exit the remaining consumer loan business, which includes products launched jointly with Apple and General Motors credit cards.
It is reported that Goldman Sachs has not yet made a final decision, but if the bank abandons the above-mentioned products, it will mean a complete withdrawal from consumer credit business.
Within Goldman Sachs, some partners complain that the troubles brought by the consumer loan business outweigh its value. Since its establishment, Goldman Sachs' consumer loan business has lost billions of dollars and has been closely monitored by regulatory agencies. At the beginning of the year, there were media reports that the Federal Reserve was investigating Goldman Sachs Group's consumer business.
Poor cooperation with Apple
Some Goldman Sachs executives privately have some complaints about Apple. Generally speaking, most credit cards will send the cardholder's bill one after another within a month. On the other hand, Apple credit card holders receive bills at the beginning of each month, which means that Goldman Sachs' customer service personnel will handle a large amount of business at the beginning of each month, making it difficult for them to handle.
Insiders have revealed that Goldman Sachs has been lobbying Apple to change the way customers receive bills, but it has not been successful.
In August of this year, Apple announced that its savings account, launched in collaboration with Goldman Sachs, had received over $10 billion in deposits. However, not all Goldman Sachs executives are excited about this.
According to insiders, Goldman Sachs has set a limit on the amount of deposits accepted into Apple's savings account, but it exceeded this limit within a few weeks. Goldman Sachs raised the limit, but is about to reach it again.
Some Goldman Sachs executives are concerned that excessive deposit amounts may make it more difficult for Goldman to withdraw from its partnership with Apple. If the partnership with Apple is transferred to another bank, Goldman may be forced to raise expensive funds at the last minute. That's why very few card issuers offer savings accounts to their partners.
Goldman Sachs previously hired Bill Johnson, a senior executive in Citigroup's credit card business, to oversee its credit card partnership and strive for profitability. According to insiders, Johnson is required to figure out how much Goldman Sachs can reduce expenses on its credit card business by the end of the year.
Insiders say that if this ultimately fails to reach the level that executives hope to see, or if additional credit card plans are needed to achieve the goals, Goldman Sachs may continue to seek to sell its credit card partnerships with Apple and General Motors.