Apple Card is a drag on Goldman Sachs, says CEO
At Davos, Goldman Sachs CEO David Solomon said his bank was too ambitious launching consumer credit, after it posted a big loss in the division mostly due to Apple Card in 2022.
Apple Card
Goldman Sachs spent a lot of money to help launch Apple Card and its other consumer services. A report from January 13 revealed the bank's consumer credit division lost $1.2 billion in nine months last year, and the losses were primarily related to the Apple Card.
"In the consumer platforms, we did some things right. We didn't execute on some others," Solomon told CNBC on Wednesday. "We probably took on more than we should have, you know, too much, too quickly."
Goldman helped launch the Apple Card in 2019 and reportedly spent roughly $350 to acquire every new Apple Card customer. And in 2022, it scaled back its efforts to turn its consumer savings business, Marcus, into a fully-fledged digital bank.
Executives of Goldman's collection of businesses known as Platform Solutions believe its consumer division may break even in 2025, although that target was initially by the end of 2022. However, the bank isn't giving up on the Apple Card.
"I think we now have a very good deposits business," Solomon said. "We're working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm."
Read on AppleInsider
Apple Card
Goldman Sachs spent a lot of money to help launch Apple Card and its other consumer services. A report from January 13 revealed the bank's consumer credit division lost $1.2 billion in nine months last year, and the losses were primarily related to the Apple Card.
"In the consumer platforms, we did some things right. We didn't execute on some others," Solomon told CNBC on Wednesday. "We probably took on more than we should have, you know, too much, too quickly."
Goldman helped launch the Apple Card in 2019 and reportedly spent roughly $350 to acquire every new Apple Card customer. And in 2022, it scaled back its efforts to turn its consumer savings business, Marcus, into a fully-fledged digital bank.
Executives of Goldman's collection of businesses known as Platform Solutions believe its consumer division may break even in 2025, although that target was initially by the end of 2022. However, the bank isn't giving up on the Apple Card.
"I think we now have a very good deposits business," Solomon said. "We're working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm."
Read on AppleInsider
Comments
They may only get 1 or 2% of every purchase card holders makes, but that quickly mounts up.
Unfortunately this may result in higher fees and less rewards.
Second: how does a credit card actually lose money for the issuer? I get that some people simply welch, and that the card issuer offers incentives in cash back, but AC is no different that any other card in this regard. GS gets the usual swipe fees, and I'm guessing AAPL gets a cut. The article cites a $350 cost for each customer, but wgi did they pay that to? AAPL? Or is this some sort of aggregate overhead cost cited to bring out the pity party for GS "losses?"
Third: boo hoo hoo for any credit card company.
Once you have a credit card customer, it’s hard to lose money on them individually, but your business can definitely lose money overall if the customers cost too much to acquire.
I am a longtime representative of this group.
Lenders basically loathe consumers with 800+ FICO scores. It's the people around 700 who comprise the sweet spot of the credit industry.
My guess is that Goldman Sachs aimed a little too high with Apple users and amassed a clientele that has less revolving debt that they had hoped. Combine that with a package of benefits and high marketing costs, GS ended up short.
I will never pay a dime in interest or finance charges. Goldman Sachs will basically never recoup that $350 they spent to acquire my business.
Worse, GS pissed me off with their lousy customer service just a month after the card's August 2019 launch and I haven't used the Apple Card since. The physical card has never left the drawer I threw it in and the electronic one sits unused in the Apple Pay app. Theoretically GS should just send me packing due to account inactivity but I have a $0.15 balance in Apple Cash which is my legal property. They would have to snail mail me a check for fifteen cents and then eat whatever administrative costs to close my account (which is probably twenty or thirty dollars).