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Snippet: Goldman Sachs Wants Out of Consumer Lending ☇

Shared on October 16, 2023

AnnaMaria Andriotis for The Wall Street Journal:

Inside the bank, partners complain that the consumer-lending business has been more trouble than it was worth, and they blame [CEO David] Solomon for Goldman’s expansion in the space. The unit that includes credit cards and GreenSky has lost billions of dollars. Regulators are circling the card business. Many top executives in the consumer-lending businesses have left or moved to other units. […]

Privately, some Goldman executives blame Apple. Most card programs send out cardholders’ bills on a rolling basis throughout the month. Apple cardholders get their bill at the beginning of each month. That means Goldman customer-service employees get flooded early every month, making it hard for them to keep up.

Goldman has lobbied Apple to let the bank change the way customers are billed, but so far has been unsuccessful, according to people familiar with the matter.

A lot of people who cover the credit card rewards game seem to dislike the Apple Card, namely because it gets 1% if you use the number online or the physical card. While I have other cards for some things, my Apple Card has become my “just about everything” card, as I generally get 2-3% cash back consistently with Apple Pay. I can see how Goldman Sachs is in a rough place, as the card has a very user-friendly interface and encourages people to pay it off. The long grace period (an entire month) is also a bit unheard of, but feels very consumer-friendly.

The Apple Card and Goldman Sachs reminds me a lot of Apple’s initial iPhone deal with AT&T—Apple was against the extra bloatware and branding typically found on most phones and AT&T was in a position where they were willing to concede those requirements in hopes of growing the business. The influx of iPhone customers put a strain on AT&T’s network, making them look like the underachieving partner. Goldman Sachs similarly wanted to grow a consumer portfolio and Apple seemed like an attractive partner. I wonder how sustainable the Apple Card will be long-term, or even what other issuer might be interested in picking up the portfolio.

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