Goldman has been stepping back from its Main Street aspirations, where the latest buzz is that the white-shoe Wall Street mainstay is in talks with American Express for the latter to take over the credit card partnership with Apple.
Goldman’s efforts do not come entirely as a surprise. During the company’s most recent earnings call, it logged a $470 million loss on the partial sale of its book of Marcus loans, and GreenSky is up for sale. The latest results also showed what might be some headwinds in the card business itself. Credit card loans, at $15 billion in the most recent quarter (which ended in March), were down from $16 billion at the end of the year, and up from $11 billion last year.
We’ll get some more clarification on the next go-round of earnings results — not just from Goldman, but from American Express too.
Should Amex indeed take on the Apple Card business, there may significant greenfield opportunity to pick up the ball, so to speak, and run with it.
The opportunity lies with younger, tech-savvy consumers, who are arguably well-versed and immersed in the Apple ecosystem.
American Express noted that spending by millennials and Generation Z was up 28% in the first quarter, and more than 60% of consumer new accounts acquired globally came from millennial and Gen Z cohorts.
During the conference call with analysts, CEO Stephen Squeri said: “Millennials have been a big part of our growth story, and if you go back pre-pandemic, they represented about 20% of our billings. Now they represent 30% of our billings… This gives me a lot of confidence as we move forward, that we’re making the right moves from a value proposition perspective and continuing to invest in the right benefits, and we are acquiring the right customers.”
PYMNTS’ data showed that millennials may indeed have the financial firepower to keep powering spending on the cards. Should American Express gain a foothold with Apple, the “crossover” may be strong.
As many as 73% of millennials describe themselves as living paycheck to paycheck. That tally has been a steady one, but the cash cushions are rising, which indicates some money in reserve that can be used to pay down, or manage, existing (and future) credit card debt. Millennial respondents told PYMNTS they had an average of $11,000 saved up in their bank accounts, compared to $7,300 in March 2022. Along with the increased savings, nearly half of millennial and Generation Z consumers have been spending more on their credit cards in a bid to manage inflation.
Roughly a decade ago, Karen Webster hinted at Apple’s ambitions to become more firmly entrenched in payments. In a column that ran in 2014, “Will Apple Become the American Express of Mobile Payments?” Webster noted that Apple, understandably, would be on the hunt to lure tech-savvy, financially well-off consumers.
And as for American Express: “From the beginning, Amex didn’t want everyone as a cardholder, just those with the capacity to spend, including corporate travelers. It organized programs and rewards and marketing around that positioning and value proposition.”
Nine years later, it seems that for Apple, the drive to become Amex-like may be realized by partnering with Amex itself.