Goldman Sachs spending heavily in preparation for Apple Card

Posted:
in AAPL Investors edited July 16
Goldman Sachs has burned through considerable amounts of money on Apple Card and its other consumer-facing initiatives, with the investment bank revealing it has spent around $275 million in 2019 alone on public-based projects.




Traditionally not a consumer-facing company, Goldman Sachs has been slowly transitioning towards more public-friendly offerings. Apple Card is one of the initiatives it is pursuing as part of the change, but the shift to consumer-oriented services has been expensive for the company.

According to second-quarter earnings released on Tuesday, CNBC reports Goldman Sachs has spent in the region of $1.3 billion on its consumer services, including Apple Card, the Marcus savings accounts, and other initiatives. For 2019 so far, $275 million has been spent, which has resulted in a 0.6% reduction of Goldman's equity return.

It was not revealed how much of the totals were spent on Apple Card specifically, but the endeavor is going to be costly to the company either way. CFO Stephen Scherr advised it slowed the rate of Marcus loan growth to prepare for the demand of Apple Card, which will be arriving this summer in the United States.

There will also be a "meaningful impact" of Goldman's reserve build to support the initial growth of Apple Card, with the bank expecting to give a "strategic update" to investors in January, along with new targets and return profiles for Apple Card and Marcus at that time.

"There's no denying the consumer business - whether Apple Card or Marcus - is a risk business," Scherr admitted. "We'll continue to look at it on a risk-adjusted return basis."

While Goldman Sachs is bearing the risk, Apple could end up earning "almost pure profit" from the venture according to analysts. In May, it was suggested Apple Card could earn Apple $1 billion dollars in revenue within a few years of its launch.

In an interview in June, head of Goldman's Marcus division Omer Ismail fought concerns the structure of Apple Card to consumers isn't produced for maximum profitability by implying customer loyalty and engagement may be more important. "The idea that doing right by the customer means being less profitable is just not an idea we subscribe to," Ismail said. "If you do right by the customer, you're going to ultimately win their loyalty."

Comments

  • Reply 1 of 12
    SoliSoli Posts: 9,178member
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    rob53watto_cobra
  • Reply 2 of 12
    rob53rob53 Posts: 2,074member
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    Totally agree with everything you’ve said. I now live in CA so there’s more businesses that use Apple Pay. Even so, most don’t advertise it. I continue to tell them they can get a free sheet of Apple Pay decals/stickers. If Apple would send me a hundred sheets for free I’d give them away every time I see a POS station that takes Apple Pay but doesn’t have stickers. 
    AppleExposedGeorgeBMacwatto_cobra
  • Reply 3 of 12
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
     Not only that, I’ve had at least 2 local places “upgrade” their POS system to one that doesn’t accept NFC payments. I think this is due, in part, to lack of knowledge around NFC payments in the first place. Both of those places that “upgraded” didn’t know they accepted Apple Pay in the first place. 
    watto_cobra
  • Reply 4 of 12
    SoliSoli Posts: 9,178member
    rob53 said:
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    Totally agree with everything you’ve said. I now live in CA so there’s more businesses that use Apple Pay. Even so, most don’t advertise it. I continue to tell them they can get a free sheet of Apple Pay decals/stickers. If Apple would send me a hundred sheets for free I’d give them away every time I see a POS station that takes Apple Pay but doesn’t have stickers. 
    I think they used to send you up to 5 packets at once, but each packet does (or did) have a dozen or so cash register stickers and window decals.



    edited July 16 watto_cobra
  • Reply 5 of 12
    AlinschiopuAlinschiopu Posts: 4unconfirmed, member
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    Since when is android and Samsung pay as secure as Apple pay ? 
    AppleExposedPickUrPoisonwatto_cobra
  • Reply 6 of 12
    22july201322july2013 Posts: 739member
    I haven't had paper money in my wallet for years. I'm Canadian. However about 25% of the places I shop don't use NFC yet so I still need to carry a card. And one day it will be an Apple Card.

    To be perfectly honest with myself one of the factors I'll switch to the Apple Card is "because it's Apple" but that's not the main reason. I also feel that the banks have never given me the services and products that I wanted. They've had decades to earn my trust but have mostly failed. Whereas I think Apple gets it that people want simplicity. And although I don't distrust the banks too much, I think they don't respect my privacy when, for example, I get these surveys or calls from their representatives (not even bank employees!) When you can't trust the banks to protect your own name, are they trustworthy to protect your money? I think not. Once they learn to respect my privacy I'll consider giving them my business.
    watto_cobra
  • Reply 7 of 12
    anantksundaramanantksundaram Posts: 19,284member
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    I am also hoping -- but I think my hopes will be dashed -- that it's a contactless card. They're becoming ubiquitous in other parts of the world, especially Europe. And they would be (or could be) ApplePay-compatible.

    If it weren't contactless, I believe Apple will have missed the chance to push the envelope in this moribund business.
  • Reply 8 of 12
    SoliSoli Posts: 9,178member
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    Since when is android and Samsung pay as secure as Apple pay ? 
    1) Who said it was “as secure”?

    2) If you’re blinded because of a hatred for Android and Samsung then there’s nothing I can say that will convince you that a bank-centric model with biometric and passcode protections is inherent more secure than what a plastic card can offer.
    watto_cobra
  • Reply 9 of 12
    GeorgeBMacGeorgeBMac Posts: 4,946member


    In an interview in June, head of Goldman's Marcus division Omer Ismail fought concerns the structure of Apple Card to consumers isn't produced for maximum profitability by implying customer loyalty and engagement may be more important. "The idea that doing right by the customer means being less profitable is just not an idea we subscribe to," Ismail said. "If you do right by the customer, you're going to ultimately win their loyalty."
    That sounds like he copied it from Steve Jobs.

    But, that philosophy is not unique to Apple or Goldman.   I have been fortunate that most of the organizations I worked for held to the same philosophy.  It works.
    watto_cobra
  • Reply 10 of 12
    Quit talking about it and do IT.
    watto_cobra
  • Reply 11 of 12
    AppleExposedAppleExposed Posts: 1,376unconfirmed, member
    Soli said:
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    Since when is android and Samsung pay as secure as Apple pay ? 
    1) Who said it was “as secure”?

    2) If you’re blinded because of a hatred for Android and Samsung then there’s nothing I can say that will convince you that a bank-centric model with biometric and passcode protections is inherent more secure than what a plastic card can offer.

    I just hate the piggybacking.

    Google/Sammy are lazy as fu**.
    watto_cobra
  • Reply 12 of 12
    zimmiezimmie Posts: 272member
    Soli said:
    I'm looking forward to this card launching. Not just because 80% of my in-person purchases are already Apple Pay so getting 2% back that is redeemed daily will be better for most of my purchases, but because this will help push *Pay adoption (Apple Pay, Android Pay, Samsung Pay, and all other similar and secure payment systems).

    I'm also expecting to see more websites adopt Apple Pay in the browser, too.

    The only other thing I wish would happen is for *Pay to give retailers a small discount on merchant fees so they will also have a reason to promote *Pay on their end. Even in 2019 there are countless entities that support NFC-based payments without even knowing it.
    I am also hoping -- but I think my hopes will be dashed -- that it's a contactless card. They're becoming ubiquitous in other parts of the world, especially Europe. And they would be (or could be) ApplePay-compatible.

    If it weren't contactless, I believe Apple will have missed the chance to push the envelope in this moribund business.
    There's little reason for the physical card to support contactless payments. After all, to get an Apple Card, you have to have an iPhone which supports Apple Pay, so the phone is the contactless payment option.

    Sure, it could be useful to have contactless payment capability on the card in case your phone's battery is dead. I suspect Apple will see that as an acceptable loss and restrict contactless payments to devices which authenticate the user.
    watto_cobra
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