Rumors about Goldman Sachs (NYSE:GS) exiting its support for the Apple Card have been circulating for quite some time. The Apple Card played a significant role in Goldman’s failed expansion into consumer Fintech. While the thesis that Goldman’s vast expertise in global markets would play well with the mass affluent by leveraging tech made sense, the execution of the strategy struggled from the beginning. Goldman eventually initiated a full-scale retreat to focus on its wheelhouse operations.
Today, according to CNBC, a deal has been cut with JPMorgan (NYSE:JPM) and Goldman Sachs to take over the Apple Card business. As part of the agreement, Goldman will take an approximately $1 billion haircut on its outstanding credit balances.
Recently, 9to5Mac reported that a deal was challenging due to the large number of subprime customers using the Apple Card. The delinquency rate for users was pegged at 4%, higher than the industry average of 3.05%.
While the Apple Card provides many valuable perks, including cash back on purchases and an integrated savings offering, JP Morgan may want to have its say on operating the card business more profitably.
JP Morgan, the largest bank in the US by assets, leads the pack in the US for the credit card business as the top issuer of both Mastercard and Visa cards.
While Goldman stumbled with its Fintech venture, JP Morgan may be better positioned to offer digital services. The bank is building out JPMCoin, the first bank-issued stablecoin, which could help it lower the cost of transfers and payments.
JP Morgan is led by the most respected bank CEO in the business – Jamie Dimon, who once dismissed crypto, but now embraces the technology as transformative.