Goldman Sachs, Apple Team Up on New Credit Card
My prediction ApplePay “Crypto” is not too far away … Apple wants in the Crypto-Arena.
Goldman Sachs and Apple are preparing to launch a new joint credit card (WSJ May 10, 2018), a move that would mark the Wall Street firm’s first foray into plastic and deepen the technology giant’s push into its customers’ wallets.
The planned card would carry the Apple Pay brand and could launch early next year.
Assume for the moment you are the leader of one of the most valuable companies in the U.S. (Apple) and you know there are simply just so many iPhones and other iDevices you can sell or sell to or provide services for.
While holding the above thought and thinking of expanding markets toward increasing market share; let’s assume you are the leader of one of the most prestigious investment banks on Wall Street (Goldman Sachs) who influences nearly every major global IPO or new investment vehicle and holds over 1.1T USD in assets under management.
While more profits are awesome for shareholders, market domination is a lot more fun. As a leader of such enterprises, being second is never exciting.
When 2 + 2 = 3
The answer may well be to combine your split personalities and see how the most technologically “innovative” company can blend into the most financially “highbrow” company to provide a service for and potentially change the economic landscape for the masses while extracting more profits for themselves and their shareholders. While more profits are awesome for shareholders, market domination is a lot more fun. As a leader of such enterprises, being second is never exciting.
To change the world by creating, providing, and driving new products with new benefits and features whereby people’s lives are improved and/or enriched and the enterprises facilitating a better future are amply rewarded. The above attributes are worthy. This is Adam Smith’s concept of the Invisible Hand at work (Wikipedia: Invisible Hand). The independently vested interests of business enhancing the lives of others and receiving just benefits for their efforts.
You may be wondering why this long introduction to today’s topic? Simply put Apple and Goldman Sachs have agreed to jointly craft a joint credit card. Notice they didn’t say they were going to jointly “market” a credit card. That would be akin to Apple branding a Visa/MasterCard or even an American Express card like banks, airlines, hotels, and other affinity groups provide. Apple and Goldman Sachs were specific in that they were going to “craft” ONE. Step aside, Discover Credit Card, your relevance is becoming more diminished.
Let’s remind ourselves that Apple, while known for their innovation, is frequently never the first to enter a market. They didn’t invent cell phones – they merely evolved them into devices that happen to be phones while connecting users to the world and the Internet. They didn’t invent digital music players — they simply developed a system so smooth and easy that it dominated all others. They didn’t invent computers, but they did make them simple, easy and intuitive to use and elegant (Design Esthetics) at the same time. Apple doesn’t need to be first, they simply demand to be the best. And, it just so happens … by being the best they dominate both customer loyalty and profitability.
The Bank, The Foundation, The Financial Fortress
Goldman Sachs, on the other hand, represents the old guard. The Goldman Sachs pedigree is beyond influential; it is also market dominating. Their alumni are recognized for their leadership and business acumen. They manage money and sit at an intersection of banking, investments, policy, and politics. Their phone calls are always answered, and their voice reverberates with authority and influence.
Why would these two singularly market dominating enterprises with vastly different cultures, ethos, and outlooks jointly create a new payments card? Besides to make money, but to achieve their objectives; drive market values, deliver new and innovative solutions, and to more deeply embed themselves in our collective lives.
There is nothing evil or wrong with the proposed services above. As a firm believer in market-based economics combined with the subjective theory of value, I support innovation and experimentation. When it comes to Apple, I am also keenly aware of the “ … Oh, one more thing …” concept made famous by its founder Steve Jobs. Steve Jobs was a visionary and master persuader when looking at technology and people. His culture of superior quality, keen design, and market-changing ideas continue even after seven-plus years since his death. So, what is the “one more thing” with Goldman Sachs?
While I have no direct idea, I believe a little bit of connected history helps. Apple enters retail and changes retailing forever. Try as Microsoft might with its branded stores and matching T-Shirts and they will never be Apple. Apple simply gets it. Apple crafts ApplePay and while not first in the mobile payments solutions drives device-based payments throughout the retail ecosystem. It is ubiquitous with “Cool”. While not everything Apple is successful, more often then not, they prevail. So, what is next?
Sakamoto Note: Economic-Changing Technology I think you coined this? ECT? Let’s use it.
I think it will be more toward blockchain technology. Commonly and frequently referred to as BitCoin or Crypto. The blockchain is Economic-Changing Technology, above and beyond the concept of money and payments. With ApplePay, Apple has a payments platform. Why a credit card? Goldman Sachs manages money and knows that money doesn’t earn sitting idle. Credit Cards provide an avenue to increase revenues and profits within their banking industry experience. As I recall Goldman Sachs holds banking licenses here and abroad. Retail banking with branches seems to be a high-cost low-value proposition, however, credit cards with branded reputations make sense. Yet we already have plenty of credit cards. So? What’s next.
Blockchain Technology needs a champion to lead the way. A champion needs to be able to afford to navigate the political and treasury related minefields. What better company with Fiscal and Networking Power to lead that charge then Goldman Sachs, especially since its former Chairman is also a former Secretary of the U.S. Treasury Secretary (Henry Paulson, 74th United States Secretary of the Treasury In office July 10, 2006 – January 20, 2009, Wikipedia https://en.wikipedia.org/wiki/Henry_Paulson ). Goldman Sachs is filled with Ivy League talent. The same schools that produce significant numbers of policy leaders both inside and outside the Beltway. Goldman Sach’s alumni and friends are, some may say … “second to none”.
Ultimately we end up with a leading politically-connected investment bank and the powerhouse technology/marketing enterprise together in a potential partnership. Together these two vastly different enterprises should be able to craft a market changing payments system backed by the blockchain technology and thereby opening the future of crypto-based currencies to and for readily accepting users (adopters) and Regulators alike (See The Crypto Battlefield: Financial Visionaries vs. The Regulators).
Maybe I am mistaken. Maybe Apple and Goldman Sachs merely believe the world needs another credit card; “A credit card just like the others”. But I doubt it. There is something bigger than the headline. I am prepared for their future because from past experience, I usually benefit well from … “One More Thing”.
Now – think about it and go enjoy your day
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