3 ms·

What is the underlying reason these consumer offerings have been such a failure? Something like a savings account should be the closest thing to free money ther

What is the underlying reason these consumer offerings have been such a failure? Something like a savings account should be the closest thing to free money there is - stick the cash into t bills, collect a margin on top and pass the rest back to the customer. Do the marketing/cs costs really outweigh the margin? Or is it some issue with how the assets backing the account are invested?

SOLAR_FIELDS 3y ago
I do recall that the way at least the Apple Card deal was structured ended up extremely unfavorable to GS. It seems that part of the reason the Apple Card deal went so poorly for GS is because the initial negotiation and terms of the agreement heavily favored Apple. So perhaps it was just lack of knowledge of the industry in a big way that tanked this deal.
mvc 3y ago
Goldman is known for servicing ultra-wealthy and business clients. Consumer finance seems like a completely different beast to me. Tighter margins. Lots of low-paid call center staff and low-paid managers to crack the whip. Folks at Goldman would rather be on the golf course doing shady deals with Trump and Musk.
- initplus 3y ago
  I guess I still don't understand... how much customer service do you need to run a savings account? How do you even screw that up? Operating a savings account like this one should be close to just picking money off the free money tree. It's wild to think that it costs them more to operate this than the margin they take off it.
  - dylan604 3y ago
    You seem to think savings account do not get withdrawn against. If you take the customers cash to put into a T-bill but the customer withdrawals money before the T-bill matures, where do you get their cash from to honor the request? Not everyone uses offerings in the manner the offerer expects. As software types, this is familiar territory. If you design a thing with only the happy path in mind while never allowing for that path not being followed, you’re in for a very rough time.

SOLAR_FIELDS 3y ago

I do recall that the way at least the Apple Card deal was structured ended up extremely unfavorable to GS. It seems that part of the reason the Apple Card deal went so poorly for GS is because the initial negotiation and terms of the agreement heavily favored Apple. So perhaps it was just lack of knowledge of the industry in a big way that tanked this deal.

mvc 3y ago

Goldman is known for servicing ultra-wealthy and business clients. Consumer finance seems like a completely different beast to me. Tighter margins. Lots of low-paid call center staff and low-paid managers to crack the whip. Folks at Goldman would rather be on the golf course doing shady deals with Trump and Musk.

initplus 3y ago
I guess I still don't understand... how much customer service do you need to run a savings account? How do you even screw that up? Operating a savings account like this one should be close to just picking money off the free money tree. It's wild to think that it costs them more to operate this than the margin they take off it.
- dylan604 3y ago
  You seem to think savings account do not get withdrawn against. If you take the customers cash to put into a T-bill but the customer withdrawals money before the T-bill matures, where do you get their cash from to honor the request? Not everyone uses offerings in the manner the offerer expects. As software types, this is familiar territory. If you design a thing with only the happy path in mind while never allowing for that path not being followed, you’re in for a very rough time.