Why Apple’s Partnership with Goldman Sachs Is The Future Of Banking | Forbes

so apple and Goldman are launching ahigh yield savings account for consumersoffering 4.15 returns and it's availableonly to Apple card holders which isApple's credit card and it's offeredthrough the iPhone I think what's reallyinteresting about it is it's really abanking as a service Arrangement soGoldman is providing kind of the bankinginfrastructure for the offering whereasapple is providing kind of the techinterface for consumers and that'sreally interesting because it's like asymbiotic partnership in that techcompanies especially Apple really Exceland user experience whereas Bankstypically struggle with that a bit morewhile the average Bank pays less thanhalf a percentage of interest on savingsaccounts Apple says it will be offeringits 4.15 annual returns to Savers withno minimums no lock-ups and FDICInsurance technically speaking appledoes not have a banking license and isfronting for Goldman Sachs Bank USAotherwise known as Marcus Marcus has astate Charter and is FDIC insured infintech parlance apple is a neobank likechime or monzo this truly a symbioticrelationship between Apple and GoldmanApple has 2 billion iPhones globallywhich Goldman can now use as adistribution channel for a savingsaccount and they can acquire depositsthat way and this is a really kind ofcompetitive environment for bankslooking to acquire deposits especiallywith all of the bank runs so this isreally kind of a smart move by Goldmanto get more customers onboarded the bestthing to probably compare to isGoogleplex Google in 2019 announcedplans to launch a checking account inpartnership with City and then it kindof had a bit of a confusing rolloutprocess and then in 2021 they announcedthat they were canceling plans we don'treally know why but there's speculationthat Google's customers a lot of thetimes are banks for like their cloudservices and things and so they didn'treally want to compete with theircustomers but Apple doesn't have thatproblem like their business is reallyabout selling phones and so they'redoing anything they can to make thephone stickier and more useful andfinancial services is another way forthem to do that online banks have reallystepped up face and attracted a lot ofdeposits with higher yieldingAlternatives that's what the moretraditional banks at kind of adisadvantage these online banks operatewithout Branch networks they don't havea lot of services and support a lot ofpeople to pay and therefore aregenerally able to offer much higheryields and I think they're trying tocompete more specifically with theonline banks more than they are with thetraditional Banks this is not the firsttime a large company outside of bankingtried to enter consumers Financialportfolios in the 1970s Sears Roebuckowned numerous Savings and Loan branchesacross California in the 1980s Searswent on to acquire retail broker DeanWitter Reynolds but eventually Searscore retail business was upended by thenext generation of big box stores likeWalmart and Targetone potential theory of what this mightmean for the banking industry is thatBanks kind of become the invisibleinfrastructure behind sort of sexierTech offerings and so their brandsbecome kind of less important to formarketing to Consumers and moreimportant for marketing to techcompanies to partner with them so thatthey can acquire more deposits take itsafe to assume that Goldman and winningthis partnership was probably the lowercost bidder because they were sointerested in building up their consumerlending and deposit business I would besurprised to see more Partnerships ofthis kind but I I think the thefinancials behind it have to be lookedat very closely in next five to tenyears it's going to likely beconsolidation in the fintech market soyou might start to seefewer banking as a service providerskind of emerge as really The FrontRunners and there's a regulatorycomponent to this as well so the officeof the Comptroller of currency is kindof cracking down on some of theserelationships and making sure thatthey're really being watched closely andthat the bank providers are making surethat the tech companies are reallysticking to to the rules of the road[Music]