According to a source familiar with the situation, Apple has offered Goldman Sachs a proposal to sever its relationship for credit cards and savings accounts within the next 12 to 15 months.

Should the change take place, it would essentially terminate one of the most prominent collaborations between a digital business and a bank.

(Photo : by Michael M. Santiago/Getty Images)
According to a source familiar with the situation, Apple has offered Goldman Sachs a proposal to sever its relationship for credit cards and savings accounts within the next 12 to 15 months.

Additionally, it would imply that Apple would have to locate a new banking partner for both its well-known credit card, the Apple Card, and its high-yield savings accounts that are associated with the Apple name. Although Apple provides its credit card and savings account through the iPhone wallet app, Goldman Sachs manages the backend banking.

Shifting Dynamics and Challenges

At a glamorous ceremony held at Apple's California headquarters in 2019, Goldman Sachs CEO David Solomon was present at the company's inaugural introduction of the Apple Card.

However, the relationship has been difficult lately as Goldman Sachs, led by CEO David Solomon, has pulled back from its earlier goals in consumer banking due to mounting expenses. Regulators have also investigated Goldman's refund and billing practices, as well as claims of discriminatory practices against women in credit limit determination.

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Goldman Sachs stated earlier this year that it will "consider strategic alternatives" for its consumer banking division.

Apple sees the credit card and savings accounts as ways to enhance the functionality and value of the iPhone while generating revenue to support its rapidly expanding services division.

If Apple were to break its contract with Goldman Sachs, it's unclear if it would look into making more significant changes to its financial products or if it has found a new partner.

Regulators have taken offense at Goldman. The Consumer Financial Protection Bureau has looked into how Goldman handled refunds and inaccuracies in credit card invoicing. Bills for Apple Card users are sent out at the start of each month, in contrast to other card schemes.

Employees at Goldman Customer Service who handle complaints and billing concerns are reportedly under additional strain as a result. A rotating bill schedule might ease that pressure. Goldman allegedly hasn't been able to persuade Apple to switch to a more conventional billing period, though.

According to the article, Goldman may attempt to sell its contracts with GM and Apple if it is unable to lower the costs associated with its credit cards. Considering that users have transferred billions of money into Apple savings accounts, it may be a challenging undertaking.

The Journal noted that the financing business could need to obtain costly emergency capital to fill any gap if Goldman is successful in convincing another bank to take over the Apple relationship, which includes those sizable savings accounts.

There are rumors that Goldman discussed taking over American Express's consumer goods in negotiations with the company. But according to reports, Amex is worried about the Apple Card's loss rates and other issues, which Goldman has been working to resolve. Leaders at Amex are rumored to have taken exception at the Apple Card's use of the Mastercard network.

Apple and Goldman Sachs Commitment: Delivering Excellence in Financial Services

An Apple representative highlighted the joint commitment of Apple and Goldman Sachs to delivering an exceptional experience for their customers, aimed at fostering healthier financial habits.

The Apple Card, acknowledged for its excellence, has garnered positive responses from consumers. The statement emphasized a dedication to ongoing innovation, ensuring the continual provision of cutting-edge tools and services to meet the evolving needs of their user base.

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