The financial alliance between Apple
and Goldman Sachs Group
launched in 2019 with the intent of tapping into the consumer finance marketplace, has hit a rough patch. The partnership that birthed Apple Card and its high-yield savings account was reportedly deemed a “mistake” by a Goldman Sachs executive, encapsulating the bank’s burgeoning discontent with the venture. By the start of 2023, Goldman Sachs had lost more than $1 billion over three years due to its Apple Card partnership. The consumer lending foray, a detour from Goldman’s traditional clientele of corporations and governments, has proven to be a financial albatross.
Announced with much fanfare, Apple-Goldman Sachs savings account is a particular bone of contention. The venture has not only been financially draining but has also trapped Goldman Sachs, as the Wall Street giant can’t offload the Apple Card business due to the millions of dollars invested in the savings accounts. Rising tensions between Apple and Goldman Sachs illuminate a different narrative — one showcasing Apple’s ambitious drive toward financial self-reliance. Between March and April 2022, Apple initiated Project Breakout, the goal of which is development of payment-processing technology and infrastructure to reduce the company’s reliance on external financial partners. The project, once it solves the remaining engineering hurdles, would encompass a wide array of financial services including risk assessment, fraud analysis, credit checks, and potentially, a new “buy now, pay later” program, all aimed at creating a self-sufficient financial ecosystem for Apple.Pushing boundaries Could brewing discontent between Apple and Goldman Sachs be a telling precursor of a broader shift? As Apple and other tech behemoths delve into the financial realm, traditional boundaries of finance are being pushed, paving the way for a new era of tech-driven financial innovation. The drive is simple but profound, leveraging technology to forge a more consumer-centric approach to financial services. Apple’s Project Breakout is not just a quest for financial autonomy, but also a vision of more integrated, convenient, and user-friendly financial landscape. Apple’s global user base adds another layer to this evolving narrative, challenging the geographic constraints of traditional financial entities and proposing a global expansion of financial services, bound not by borders but by the reach of technology.
“ A major challenge for traditional models. ”