Apple’s new credit card isn’t particularly innovative by current industry standards. But for Goldman Sachs, it’s entirely new territory and a bellwether of how legacy banks are trying to stay relevant by linking up with Big Tech.
Like most industries, banking has been going through a technology-driven identity crisis, grappling with the fact that, instead of selling financial products directly to customers at physical branches, they’ll probably become invisible financial platforms behind other brands. Bill Gates famously put it best in the 1990s when he said that, “banking is necessary, banks are not.”
“The prophesy is slowly coming true,” Dave Murphy, senior vice president at Publicis Sapient, told Cheddar. “For the past five years, banks have been told repeatedly that that the fintechs will disintermediate them and relegate banks to infrastructure.”
Apple Card is “the first major step towards pushing banks to be purely infrastructure players,” he added.
The card is a brand loyalty play for Apple. It isn’t necessarily trying to compete with Chase or American Express. By linking up with Goldman, Apple wants to deepen its financial relationship with its existing user base — like Uber and Amazon have done with their Barclays and Chase-issued cards.
“Today banks may not be necessary, but the services banks offer are,” said Craig Schachter, global head of fintech ecosystem at Finastra, a financial services software firm. “They need to be able to prove to customers that they can protect those accounts and the assets the way banks are proven to do.”
So what’s in it for Goldman? The bank will get all of the data on Apple Card users that Apple maintains it doesn’t have access to itself — which Goldman needs to bulk up its own nascent, consumer-facing consumer banking unit, Marcus. (Apple promises that Goldman won’t sell the data to outside parties.)
Launched in 2016, Marcus gave Goldman an opportunity to finally enter the consumer market. But for other banks, namely Chase and Wells Fargo, launching digital-only consumer offerings has so far been an unsuccessful attempt at navigating the cultural shifts in the industry.
Through Marcus, Goldman offers personal loan and high yield savings accounts and plans to offer wealth management as well as credit cards. Marcus remains separate from the Apple Card, which carries the Goldman Sachs brand on the back of the physical card.
“There are certain banks for whom their brand is everything, and certain banks who will be happy to partner with fewer but cooler tech companies out there,” Schachter said.
Even though Goldman Sachs was never had a successful consumer brand, the firm has taken effective steps to rehab its reputation: launching fee-free financial products through Marcus and acquiring the colorful budgeting app Clarity Money. Days ahead of the Apple Card reveal, Goldman announced new hiring targets for women and people of color. Its CEO, who took the helm just last month, moonlights as an EDM DJ.
It’s a convenient time for banks to shift from owning the consumer relationship to working in the background; Big Tech has taken over ‘Too Big To Fail’ banks as the industry that’s easy to hate.