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Goldman is looking for a way out of its partnership with Apple
- deleted 3y ago[deleted]
- nortlov 3y agohttps://archive.ph/sp4sl https://archive.ph/sp4sl
- sturob 3y ago"In January, Goldman disclosed that it had lost about $3 billion on the consumer-lending push since 2020." Looks like Tim Cook will be joining Warren Buffett in the 'squeezing Goldman Sachs' hall of fame: https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-goldman-sachs-sale-billions-return-bailout-2020-5-1029212109 https://markets.businessinsider.com/news/stocks/warren-buffe...
- kirkbackus 3y agoIn the attached article > After hovering around record lows for much of the pandemic, consumer delinquencies are rising across the industry. > It lost slightly more than $1 billion in 2021 and $783 million in 2020, after accounting for operating expenses and money set aside to cover possible losses on loans That seems like an enormous amount of money to support buy now and pay later
- tempest_ 3y agoThe retailers love it though. I even Amazon is getting in on it.
- frankfrankfrank 3y ago[dead]
- dylan604 3y agoApple has enough cash reserves to be able to be a bank themselves, but I guess are much too smart to use their own money. Is the buy now, pay later all of what this stems from? I have never looked into it, but I assumed they were also backing the Apple credit card which I consider totally different from each other.
- ayende 3y agoIt's more than that. Consider Apple's strongest advantage, it's brand. If Goldman is the one handling the lending, it is also the one sending you to collections. The PR damage to Apple's brand can be significant
- dylan604 3y agoBut Apple could take it to an 11 too. If they finance your equipment and you fall behind on your payments, guess whose equipment just went into lock-out mode... Apple could then allow the device to be returned to an Apple Store, and credit will be applied to the account. A voluntary return policy, only throw in a carrot of if you provide a memory stick, they'll make you a copy of the data for a small nominal fee.
- NicoJuicy 3y agoThat will most definitely destroy the brand
- dylan604 3y agoFord, Chevy, Toyota, Honda, et al. repo cars daily, and their brands are not hurting. People know when they can't make payments that their collateral is likely to be collected. I'm not saying I'm for them doing this or anything, but just taking the dystopian concept to a logical completion. We've already seen where self driving cars have been discussed repossessing themselves, so this is just the natural extension of the same concept. This forum tends to think that places like FB, Googs, etc should have a very negative brand due to the data collections, but the masses don't give a damn.
- tedunangst 3y agoWait to see what the realized losses are. Banks are kinda infamous for huge preemptive write downs, then discovering "profits" when the loans pan out.
- formercoder 3y agoI think it is that, I assume "money set aside to cover possible losses on loans" means income statement provision for future losses.
- formercoder 3y agoWhat's really shocking is that this number is post provision for future losses, which is a non cash accounting charge that the media often uses to make banks look worse. These are real losses.
- a2tech 3y agoI wonder how the savings kickback feature would work under Amex--I don't think they have any partnerships like that
- anuragsoni 3y ago> savings kickback Are you talking about cash back? If so Amex does offer cards that support cash backs (I've had one for quite a few years). If you are talking about savings accounts, Amex also offers a High Yield Savings account whose rates are very competitive with other banks in the US.
- a2tech 3y agoYes, the cash back into a high yield savings account. My wife has it and it’s a great setup
- no1groyp 3y ago[dead]
- anuragsoni 3y agoAmex does have products that cover both these use-cases independently, so I'm assuming if Apple-Card indeed moves over to Amex these features won't go away and would instead be fulfilled via Amex savings account + Amex's existing cash back support.
- petercammeraat 3y agoPartnership with American Express could lead to Apple Card being available in more countries.
- troupo 3y agoAmerican Express is often not accepted even in countries where it's supposed to be present (e.g. quite a few shops in Sweden don't accept AmEx). Visa and MasterCard are much more universally accepted.
- grepfru_it 3y agoReal talk, shops will not continue to reject AmEx when they realize Amex is bringing the size and scope of the APPLE consumer market
- troupo 3y agoThat consumer market is already available to them via Apple Pay, and people paying with their Visas and MasterCards. Apple Card is non-existent outside the US.
- tedunangst 3y agoHow many Amex holders don't have a second card? I've never heard of anybody getting to the checkout line, then saying oh drat, they only take visa, and walking out.
- gumby 3y agoOTOH I typically only have 2-3 non-Amex charges a month. Costco is the main one (used to be Amex only too).
- tedunangst 3y agoI'm sure lots of people use their Amex preferentially, but I've never seen anyone put their hand on a door handle, then see that only visa/mc stickers are in the window, and walk away.
- jxf 3y agoQ: The article doesn't say much on this point, but are there any hints about why Goldman was losing so much money on consumer lending at a time when other lenders seem to be doing comparatively better?
- gumby 3y agoI think it's a combo of not having a culture for it and that the margins in that space are lower than that of their other lines of business. Apple is the master of entering new LOBs always with (only when) they can get the same margins they do on the rest of their business. Remember how people laughed at the price of the iphone? They didn't care -- the target was 1% of the phone business: the profitable part.
- ender341341 3y agofrom previous readings, some of it's "we're counting potential future loses as current loses" but post pandemic lots of lenders are starting to feel some squeeze.
- DLA 3y agoApple could do the financing part themselves and partner with a card network for comms infrastructure.
- fnordpiglet 3y agoBeing a retail bank is not a simple undertaking. They would not want the complexity and regulatory distraction partnering with a bank is a smarter move.
- deleted 3y ago[deleted]
- gumby 3y agoHa ha good luck, suckers. Negotiating with Apple is a fool's effort: they have too much experience and are too good at it. Amex are no dummies either (despite a couple of near death experiences over the years). They'd be a good match with Apple from a consumer perspective but I find it hard to imagine that Apple would give up the terms of the sweet deal they struck with Goldman nor can I believe Amex would be willing to accept those terms. Goldman isn't going to go out of business due to their botched consumer foray, but I'm sure Apple would be quite content to continue to peacefully pump blood out of Goldman until the original agreement runs out. And Goldman: next time don't recruit a DJ to be your part time CEO!
- carabiner 3y agoThis is extraordinary because Goldman Sachs has been negotiating contracts for 150 years, from companies to governments. You can't expect them to win every bet, but it's a striking example that a tech company might have better financiers than a financial one.
- gumby 3y agoApple, headed by a supply chain guy, famously has a single balance sheet and pl, not divisions. They are not afraid of walking away from a deal that doesn’t meet their criteria, and they are past master at squeezing their suppliers. Goldman is a sprawling group of interests, far more transactional, and though it’s no longer a partnership, doesn’t speak with one voice like apple does. I don’t like Goldman, and while I use apple gear I don’t want to do business with them beyond making purchases.
- efitz 3y agoNo wall: https://archive.fo/sp4sl https://archive.fo/sp4sl
- yardie 3y agoI use an Apple Card and it’s good but nothing amazing. The incentives and benefits are pretty basic. The interest rate isn’t competitive, not even a 0% teaser rate. But I use it because it’s super fucking convenient. 1 account for my entire family. It helps catch billing mistakes for example we were paying for 2 Prime subscriptions for years; a monthly and annual. My impression is Apple is trying to be the universal app. Chat, App Store, media, and bank. And GS is there stepping stone.
- pazimzadeh 3y agoyeah the best part is the instant push notifications when a transaction goes through
- tgcordell 3y agoI don't think this is unique to Apple as my Chase cards do this. I'm assuming most CCs do.
- WirelessGigabit 3y agoSadly no. My AMEX does it. But my BofA does not.
- DJPocari 3y agoMy BofA does so I think you just haven't set it up. The settings pages for BofA are awful so I don't blame you. Took forever to figure out how to setup auto payment for my credit card.
- a1o 3y agoThis isn't default for all US banks and cards?
- pazimzadeh 3y agoI use a community credit union, most of their rates and products are better. Up to a certain amount of money
- frankfrankfrank 3y ago[dead]
- paxys 3y agoIt's bizarre how Goldman screwed up their push to consumer products so bad. How do you manage to lose 3 billion dollars in 3 years?
- tough 3y agoYou loose 1 billion a year
- stinkyy 3y ago[dead]
- missedthecue 3y agoYou lose a billion a year. Chump change, Uber has lost a billion a quarter for a decade.
- ineedasername 3y agoA question: Credit cards are generally profitable for banks, interest rates set accordingly to account for high default risk for these types of unsecured loans. So what is it about these particular cards (really the audience using them) that makes them disproportionately more risky/prone to default?
- themoonisachees 3y agoApparently the default rate for pay later loans was astronomically low during the pandemic, and it kicked back up again afterwards, probably compounded by rampant inflation. Additionally, the way to get such a loan is "own an iphone" which is way more accessible than having to sit at a bank and talk to a guy, or even do it on your bank's app. If this trend continue I could see lawsuits (with or without merit) about how vetted loanees actually were.
- ineedasername 3y agoGetting a credit card usually is pretty easy though unless you have a recent bankruptcy, in which case you need a secured card to work your way back up the credit ladder. An 18 year old with no credit history can generally get a very low limit card (my first as such, in the 90’s, was $500 limit) Makes me think their screening process for Apple cards was awful from the start. Either that or all the banks are seeing higher defaults right now (inflation etc) but GS doesn’t have a deep enough consumer base for profitable customers to cover things. Or GS got into an area of finance they didn’t understand well enough to do it right.
- itissid 3y agoDoes apple's foray into being a financial institution that can lend not already undercut the Goldman venture by being a lender(Apple Financial LLC ) and owning the PoS for the transaction via the iPhone? In other words why did goldman not sue apple(or think it should have put that in the contract)? 1. I thought their Apple Financial LLC is now a lender that gets to keep all the interchange fees from transactions on its own Digital wallet. This means users don't have to keep a 3rd party CC and Apple can lend to the Merchant. 2. Apple will then need to collect money from the users at the other end, which I thought was gonna be via their High Yield saving account: https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/ https://www.apple.com/newsroom/2023/04/apple-cards-new-high-... This should complete the loop...
- itissid 3y agoAnd assuming I am right about apple owning the whole loop e2e. The play here is to replace Mastercard and Visa's monopoly, or in other words be what Square Payments was aspiring to be but hasn't gotten there, yeah?
- Simulacra 3y agoWas I the only person to get the Apple card and then cancel it because I wanted to have the titanium card?
- flashgordon 3y agoDamn Goldman actually getting squeezed. That is quite some delightful irony you don't see everyday!