Tim Cook Struggled To Get Goldman-Backed Apple Card — Now Bank Wants Out: Reports

When Apple introduced the Apple Card in 2019, Goldman Sachs, its banking partner, said the product would “revolutionize the credit card experience.” But during a test run before a public rollout, Tim Cook, Apple’s CEO, struggled to get his credit card application approved, The Information reported Wednesday.

The report highlights the challenges ahead for companies with limited experience offering credit services to retail consumers.

Now, Apple’s partnership with the bank is on the brink of collapse, according to reports. Goldman Sachs, a 154-year-old investment bank, is looking to exit the deal and find a new financial services partner to take its place, the Wall Street Journal reported late June. Goldman Sachs wants to offload the partnership on to card provider, American Express, according to reports, but a deal is still up in the air.

Goldman Sachs traditionally serves large institutions and high networth individuals. But it entered the retail banking industry with much fanfare in 2016 when the bank introduced Marcus, a digital-only bank designed for everyday consumers and began offering personal loans to users. The service had attracted over $50 billion in consumer deposits by the time the bank struck its deal with Apple.

In addition to hosting Apple Cards, Goldman Sachs is also powering Apple’s consumer saving account, which was unveiled in April.

But in 2022, the Wall Street giant began a major restructure, including plans to scale back its consumer banking ambitions. The company said it had accumulated over $3 billion retail banking losses since December 2020 and has since sold off some of its retail assets and folded others into new units.

The bank had agreed to strict terms and to forgo interchange fees traditionally charged by card companies as Apple removed fees on payments, The Information reported.

The bank will not make any profits in the near term even though the deal runs through the end of the decade.

Both partners also overestimated demand for their product — after originally projecting 5 million customers in the first year, they had increased their technological support in anticipation of 10 million users. But they finished the first 12 months with just 3 million customers.

Aside from profitability, the partnership also struggled with some technical challenges.

Beyond Cook’s difficulty getting approved for Apple Card, consumers also complained that the underwriting process might be discriminatory and reported chargeback disputes, prompting a regulatory investigation into the bank’s consumer credit business which had over $16 billion in credit card balances last year. Goldman Sachs was cleared of any wrongdoing, according to The Information.

If and when Goldman Sachs finds a replacement partner bank, it will require Apple’s approval, the Journal Reported.

Neither Apple nor Goldman Sachs immediately responded to The Messenger’s request for comment.