Apple Card: Goldman likely stuck, Amex unlikely contender, Tim Cook once denied

Goldman Sachs has somehow managed to lose money on its share of the Apple Card business, and American Express has been floated as a potential suitor to replace Apple’s issuing partner.

However, a lengthy article from The Information unpacks the complexities of what changing banking partners would require … as well as some pretty good tidbits about Apple.

Why save the best for last? The real gem from the new piece by the Information is that Apple CEO Tim Cook actually couldn’t get through the application process for Apple Card before it was announced.

Engineers from the Silicon Valley giant and the Wall Street titan were pulling an all-nighter a few months before launch, scrambling to find a solution to a problem that had cropped up: Tim Cook couldn’t get approved for an Apple Card.

Sure, Cook’s financials are relatively strong, but he’s also a high profile target for fraud. Ultimately, Goldman Sachs had to do some work behind-the-scenes for the Apple CEO to be issued an Apple Card.

Goldman’s underwriting system rejected him as a result, according to four people familiar with the matter. Goldman was eventually able to make a one-off exception, and Cook got his card.

The Information also reports that the US-only Apple Card had around 10 million users as of early 2023. Despite Goldman Sachs reportedly wanting to exit the consumer credit business, the investment bank may be stuck with those 10 million customers for a while.

The report casts doubt on the likelihood of American Express rescuing Goldman Sachs from the Apple Card:

Apple views American Express as a brand with similar prestige to that of Goldman, people familiar with the matter said. But neither American Express nor JPMorgan Chase, another potential partner, focuses on co-branded cards. They also wouldn’t be likely to play second fiddle in a card partnership in terms of branding.

If not Amex or Chase, then who? The Information cites “people familiar with the company’s thinking and potential options” in reporting that a less recognizable name in banking could take over Goldman’s contract with Apple:

The tech giant could choose a bank that is large enough to take on the Apple Card’s portion of Goldman’s $17 billion credit card portfolio as well as related savings accounts, and that could do everything necessary for regulatory reasons but otherwise remain invisible to the customer, the people said. Apple could become more involved with aspects of the business that Goldman now manages, such as underwriting decisions, fraud prevention and customer service.

However things shake out with Apple Card, it doesn’t sound like a resolution will be reached anytime soon. While the report emphasizes that it’s unlikely Goldman Sachs decides to stick with Apple Card, it also points out the complexity in transitioning that could take a year and a half to work through.

The full, pay-walled report is available from The Information.