Apple could just start their own bank. Apple’s wealth, power, and brand allure should alleviate some of your concerns. They will find a willing partner who will uphold their offering.
The amount of red tape involved to become a fully regulated bank will make even a “trillion” dollar company bend the knee.
There’s a reason why tech companies partner with well established banks in the first place. To avoid the headache involved with day to day operations of a bank.
GS leveraged their reputation and greased the regulators to get into the consumer bank business. Now they are paying the price.
Maybe Apple would be a decent bank. But at the same time I don’t want to discuss my financial details with a random Apple Store employee. Lol
On the other hand, Apple already has a direct relationship with Green Dot Bank for Apple Cash, and Green Dot is an expert in this field of running consumer accounts for tech companies. The only issue with Green Dot is they don't offer HYSA accounts, as far as I can tell (Wealthfront only uses Green Dot for Checking account features and money is swept between their actual HYSA and Green Dot to provide these checking account features).
> These features [...] led other banks with established consumer credit card operations including Apple's long time partner Barclays, along with Citigroup, JPMorgan Chase and Synchrony, to turn down Apple's proposal. Goldman Sachs defended the terms of the deal saying they were "thrilled" with the partnership and seeking "to disrupt consumer finance by putting the customer first."
so it was hard enough to find a willing partner in the first place, and seeing the trouble Goldman Sachs has with it is not really likely to entice others to jump in...
Banks are not good businesses for a shareholder. When a bank is in trouble the shareholder tends to be zeroed to protect deposits. PE ratios for bank stocks tend to be bad.
You have a lot more leverage being a big client of a bank than its shareholder. The pecking order is roughly big client > senior management ~ shareholder > other senior employees > smallish client > junior corporate employee > retail client ~ teller.
I looked into this - Apple actually only has $62B in equity in their business - $332B in assets and $270B in liabilities. [valustox.com/AAPL]
GS is worth $100B and has $116B in equity. [valustox.com/GS]
Of course, Apple has a market cap of 2.8T and could buy GS 28 times over using shares, but that involves diluting shareholders to fund this new venture.
On the other hand, that might be a great new revenue driver for Apple since everyone already has a phone - I bet they could be a bigger, better bank than the big banks. Even JP Morgan, the biggest US bank, has a market cap of $435B [valustox.com/JPM].
Yeah, and GS is the perfectly wrong bank for them to buy as it's really just an investment bank.
But all this muttering sounds like we're going to see GS buy a tiny bank, saddle it with the consumer business (e.g, Apple Card and savings) and then sell that bank to Apple.
I wonder if "owns an Apple device" is enough to count as a group for a credit union ... :D
There is no purpose to GS buying a tiny bank, they already have all the licenses and regulatory requirements and liability exposure. And they opened to retail customers 7 years ago:
What motivation would Apple have to buying a bank and exposing itself to all that extra regulation and liability? Apple will just move on to the next best offer they get from a bank for a cobranded credit card, like any other retailer.
Accounting measures aside, have you ever heard anyone express positive sentiment toward GS? They have negative (colloquial) goodwill in my book, although I'm definitely highly influenced by Buffett's summary of his experiences with them.
- investors think their assets are not worth the sticker price
- looming lawsuit acts like a liability but may not show up on the books yet (see Hawaiian Energy - Hawaii wildfires - valustox.com/HE and Verizon - lead cables - valustox.com/VZ)
- investors expect a lower profits, which sort of translates into being equivalent to their assets being worth less.
Some companies, like banks, have vast assets, vast liabilities, and moderate earning power. Tech companies have almost no assets, but huge earning power - because the real asset is arranging engineers in a certain way, and that's hard to measure on a balance sheet.
>They will find a willing partner who will uphold their offering.
I don't think people quite understand what is on offer. And precisely why no bank wanted to work with Apple apart from Goldman, which has zero retail banking experience.
>Apple could just start their own bank.
It is not like Apple owning a bank could do without all the banking regulation. The whole reason why Apple didn't start their own payment network ( Visa / Master ) or their own Bank ( Goldman ) was because they dont want the risk, but want all the benefits.
> Goldman, which has zero retail banking experience.
Goldman runs Marcus, an online only HYSA. The interest rates for that and for Apple Savings (which they also run) are close, but not the same. It's weird.
There’s a reason why tech companies partner with well established banks in the first place. To avoid the headache involved with day to day operations of a bank.
GS leveraged their reputation and greased the regulators to get into the consumer bank business. Now they are paying the price.
Maybe Apple would be a decent bank. But at the same time I don’t want to discuss my financial details with a random Apple Store employee. Lol