- Credit-card industry observers and competitors have cast doubt on the Apple Card’s profit potential.
- The card, a partnership with Goldman Sachs, boasts some consumer friendly features, including no fees and tools to keep interest payments at bay, which could stymie revenues.
- Goldman Sachs isn’t sweating the profit concerns, according to Omer Ismail, head of consumer digital finance in the Americas for Goldman’s Marcus division.
- At Business Insider’s IGNITION: Transforming Finance event Monday, Ismail said they view card’s features as tools to build customer loyalty and a long-term advantage.
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Not long after the Apple and Goldman Sachs credit-card collaboration was announced to great fanfare, industry observers — some of which bid on but did not win the deal to work with Apple — came out of the woodwork to voice their concern.
The problem, as they see it: Goldman’s profitability outlook for the Apple Card, which charges no fees and boasts consumer friendly features that help customers avoid paying costly interest, is dim.
Omer Ismail, head of consumer digital finance in the Americas for Goldman’s Marcus division, isn’t sweating it.
When asked about the credit-card’s prospects Monday at Business Insider’s IGNITION: Transforming Finance event Monday, Ismail threw cold water on the notion that providing value and protection for customers wasn’t in their best interest.
“When I think about Marcus overall, the idea that doing right by the customer means being less profitable is just not an idea we subscribe to,” Ismail said during a conversation with BI’s Dakin Campbell.
Ismail said they take the opposite view: the only way Goldman, a new entrant in the consumer finance world, is going to build a sustainable competitive advantage is by taking care of and winning over customers.
“If you do right by the customer, you’re going to ultimately win their loyalty,” Ismail said.
Being the new bank on the block gives Goldman advantages, as well. While industry veterans are having to tangle with and spend money revamping ancient systems designed to serve a different era, Goldman is building its consumer business from scratch on the back of modern technology.
“We don’t have any legacy business models and we don’t have any legacy technology,” Ismail said.
In theory, this should mean Goldman can operate a credit-card business more efficiently and at lower costs than some of its competitors.
We’ll get more clues about the Apple Card’s potential and popularity with customers when it launches later this summer.
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