Not so long ago, Goldman Sachs (NYSE:GS) had huge ambitions in the consumer finance space enabled by Fintech. The theory expected that Goldman could lever its deep expertise in financial services to serve the masses by creating a tech stack to power consumer financial transactions. While the theory may have been great, the execution kind of sucked, and Goldman quickly retreated from its consumer aspirations, retrenching to what it has done well in the past.
One of the beneficiaries of Goldman’s Fintech endeavors has been Apple (NASDAQ:AAPL), more specifically, the Apple Card. Popular with users, the simple and versatile digital (and physical) card in partnership with Apple has been a hit with users but not so good for Goldman. In a report this week, WSJ.com said Goldman may face huge losses when it offloads the Apple Card Business – something it has been trying to do for some time now. Goldman has already exited another card product operated in partnership with GM. Reuters reported this week that Goldman will probably take a $400 million pretax charge from the sale of loans to small and medium retail businesses and its exit from the GM credit card partnership.”
WSJ previously reported that Apple provided an option last year. It is uncertain if Goldman has agreed to the arrangement.
As for credit balances on the card, the report pegs it at $17 billion. The GM partnership apparently held just $2 billion in credit. The separation is expected to be “far more challenging” for Goldman.
Both companies have provided few details on the specifics beyond high level numbers. There have been chatter that Goldman did not like the card as many users set it to autopay and do not roll balances (so no interest charge). What we do know is Goldman wants out as it continues to lick its self inflicated wounds from its consumer Fintech adventure.
