Goldman Will Soon Finance Your iPhone Purchase

Two weeks after Goldman reported its worst revenue growth in two years - driven by a 50% plunge in bond trading - the push by the FDIC-backed hedge fund, which has realized that traditional trading just won't cut it any more in a low vol world - into traditional banking and consumer finance reached a new milestone when the WSJ reported that the investment bank, which famously evaded responsibility for its role in disseminating toxic mortgage securities, is in talks to provide financing for iPhone purchases. 

This would mean customers purchasing a $1,000 iPhone X could soon take out a loan from Goldman's recently launched consumer loan unit, Marcus, instead of charging it to credit cards that often carry far high interest rates.

And with interest rates climbing and consumer revolving credit - a fancy term for credit-card debt - reaching all time highs, according to the latest data, the competition to offer affordable loans is intensifying.

goldman

While talks between the companies are reportedly still in progress - and the deal could still fall apart - the deal would be a crucial victory for Goldman as it struggles with falling trading revenues thanks to the unprecedented placidity across markets due to post-crisis centrally planned markets (though if the turbulence from earlier this week proves resilient, traders could find themselves back on top of the bonus pool).

Goldman's retail-banking push began in 2015, when it became an FDIC-insured lender capable of accepting customer deposits by acquiring GE Capital Bank's online deposit platform, including $8 billion in online checking deposits and $8 billion in brokered CDs - thereby providing Goldman with a virtually costless source of $16 billion in funds. It since launched other consumer-facing products, like Marcus, an online credit-card refinancing tool.

The partnership would be a coup for Goldman as it tries to grow its new consumer bank. Better known as an elite adviser to corporations and governments, Goldman is embracing retail banking and plain-vanilla lending in pursuit of growth as some traditional areas of strengths, namely trading, slump.

In 2016 Goldman launched Marcus, an online lender that helps people refinance credit-card debt. The firm is now building a “point-of-sale” financing business that will offer loans to shoppers at checkout, according to people familiar with the firm—effectively finding those customers one step earlier.

This combination of consumer offerings verges on deviousness: First, Goldman's Marcus tool can help you refinance your credit card debt; then Goldman will help you plunge right back in with a "low-interest, don't-miss" financing offer for that shiny new phone.

Per WSJ, shoppers in 2017 borrowed more than $200 billion using retailer-affiliated credit cards or point-of-sale loans, consulting firm First Annapolis estimates. Some $80 billion of that was spent on big-ticket items like furniture and electronics, which can take months to pay off, all the while accruing interest charges.

By offering a lower-cost loan, Goldman hopes to siphon off some of that business. Partnering with a consumer-tech giant like Apple would almost certainly bring in millions of customers that Goldman wouldn't have had otherwise.

That said, this wouldn't be the first time Apple partnered with a bank to offer zero-interest loans on upgrades and "other options" on different devices. And as Tim Cook reminded us, even though the "sticker shock" from the iPhone X could be daunting, consumers should think of it more like giving up "a few coffees a week."

Apple introduced a program in 2015 with Citizens Financial Group Inc., in which the regional bank offered zero-interest loans for iPhone upgrades and higher-interest options for other device purchases. Part of Goldman’s talks with Apple involves taking over some form of the upgrade program. It is unclear whether anything will change with the handling of the outstanding Citizens loans. The Providence, R.I.-based bank didn’t have an immediate comment.

The program started as wireless providers were scaling back subsidies for iPhones. It allows customers to pay for a new iPhone with a 24-month financing plan and upgrade to a new device after making 12 payments, a strategy that helps keep customers coming back for the newest models.

For Apple, the upgrade program is taking on increasing importance as its high-priced devices create sticker shock for some. Facing questions about the affordability of the new $1,000 iPhone, Chief Executive Tim Cook said it works out to $33 a month. “That’s a few coffees a week,” he told analysts during an earnings call in November.

Goldman's move into online consumer banking also puts it at odds with fintech companies like Affirm Inc., which also provides consumer credit online.

While consumer banking is subject to myriad more consumer protections, the death of the CFPB could make it easier for lenders to take advantage of their customers. The question now is, will the Vampire Squid treat regular Americans with the same ruthlessness that it treats its corporate clients?

To be sure, the deal is a two-way street: by pursuing this transaction, Apple is confirming sales are slowing, and the company is seeking to boost sales at any APR as that "sticker shock" we mentioned above has apparently convinced its legions of loyal customers to hold on to their old devices for just a little bit longer, despite Apple's questionable practice of deliberately slowing down older phones, which recently attracted the scrutiny of federal investigators.

Comments

shocktherapy Aeonios Wed, 02/07/2018 - 07:33 Permalink

Now the presence of this instinct explains why we are so often taken by advertisers. You know, those gentlemen of massive verbal persuasion. And they have a way of saying things to you that kind of gets you into buying. In order to be a man of distinction, you must drink this whiskey. In order to make your neighbors envious, you must drive this type of car. In order to be lovely to love you must wear this kind of lipstick or this kind of perfume. And you know, before you know it, you're just buying that stuff.That's the way the advertisers do it.

4 February 1968 
The Drum Major Instinct 

Martin Luther King Jr

In reply to by Aeonios

mobius8curve Aeonios Wed, 02/07/2018 - 07:39 Permalink

The big banks know the world is headed toward a global electronic crypto currency that requires an iPhone that will act as a balance sheet of credits and debits as a wallet that also is being used to purchase. Your biometrics will be required to access that iPhone:

https://www.activistpost.com/2018/01/congress-quietly-pushing-bill-require-national-biometric-id-americans.html

Once everyone surrenders their biometrics, the demand for your iPhone to hold those biometrics as the gate pass to enter the world wide WEB of maritime law will be the next step. Once your biometrics are surrendered to a global network your constitutional rights will be surrendered as this 6 minute video begins to reveal:

https://www.youtube.com/watch?v=AxDfBpcjKgs

You have been warned this is closer than you think:

https://sumofthyword.com/2017/01/18/the-mystery-of-lawlessness/

And this event will happen 7 years later:

https://sumofthyword.com/2016/10/04/the-rapture-of-the-church-is-after-the-tribulation/

  

In reply to by Aeonios

Davidduke2000 Wed, 02/07/2018 - 07:26 Permalink

It would not be long when you Iphones will be inherited from your father and your kids will inherited from you as with inflation the phone will be $50,000 

Last of the Mi… Wed, 02/07/2018 - 07:28 Permalink

Iphone market is totally saturated. Remember AOL CD's. You couldn't retrieve your mail out of the mail box without one being in there. Same with iphones. It was an absolutely revolutionary one of a kind brilliant idea to combine the pda and the phone. Jobs did it. Since then Apple has been merely monetizing the idea and adding something shiny to increase sales. Gigs up, party's over. Where's your new idea now Mr. Cook? You're no Steve Jobs. 

deez_f_nutz Wed, 02/07/2018 - 07:29 Permalink

It's a got-damned phone people. But hey, if the two parties are willing and able to create a financial arrangement, let the mortgagor pay the debt.

in other words: Let the dipshit LCD consumers pile on some more debt.

Boing_Snap Wed, 02/07/2018 - 07:37 Permalink

Independant crypto, meet your demise. Soon the government will safe us all from the evil of unregulated currency markets that they already control.

This is the enslavement tool of the elitists, stop using digital money or the virtual debt monster will keep you on the hamster wheel forever.

buzzsaw99 Wed, 02/07/2018 - 07:42 Permalink

consumers should think of it more like giving up "a few coffees a week...

so they are actually coming out and saying "we know you're tapped out, fuck starbucks, buy a new phone!"  ???

starbucks should say: fuck an overpriced new iphone, have an extra espresso!

idiocracy is here, and goldman has really degraded themselves making such puny loans.

wolf pup Wed, 02/07/2018 - 07:48 Permalink

Come. Pretend with us. Your Utopia? Just around the next corner.. 

Lease Life. 

Lease your abode. Your clothing.

Lease your vehicles. 

Pay through your numbed nose monthly for every ‘aspect of American life’ while we tax you for doing so. 

Lease your phones so we can track you all, not just the financially solvent. Quick. Get in before rates rise...

Own nothing.

Be dependent on our “largess” using your own monies, taxpayer. Watch us grow.

Soon(ish) is food. Potable water. Prescriptions required to sustain life.  Already stuck as debt on credit cards by the comatose or thise with no options, watch amazon, partnered, of course, with some bank, create the New Way to “Purchase” food, whatever scam that is. 

Just Lease Everything. If not, as you can see via the iPhone X, we’ll just price it so most of you will have to, plus we will outmode each model regularly, with zero support for the prior. Oh, heh, already got that factor. 

And then will you all just shut the hell up. You've got what you want, and so do we. 

Luvvies, your Establishment technocracy. 

northern vigor Wed, 02/07/2018 - 07:56 Permalink

I hate it when they say "it is only a few coffees a week".
$33  for a phone, and another $33 for a package. or $66. Then another $30 for seven coffees every week...it all adds up kiddies.  

trueFacts Wed, 02/07/2018 - 07:58 Permalink

makes sense, ...since the next phone will probably cost more than my car.  ....but it will be worth it, if it has more pixels and a 40-inch screen.

paulp Wed, 02/07/2018 - 08:08 Permalink

Goldman Sachs is reduced to skimming a few percent from iphone purchases.

Front running trades not good enough any more?  Telling your retail customers to buy what your trading desk is trying to dump doesn't work now?

Who knows maybe they will start managing bulding janatorial services next.

Maybe they can get a cut of their employees office cocanine fund too.

How about they start a porn for pay feed to the SEC employees.  Monetizing lax securities regulation.  Right up the GS alley.

Or, have the FED selectively enforce banking regulations on the member banks that don't pay up to GS.

Try to figure out how to get FIRE up to 60% of GDP.  Once there, try to muscle in on the governments 40% share of GDP.

Making Nancy Pelosi your corporate spokesperson would do a lot to.  Do it!  She might be looking for a job pretty soon.  She's done such a great job for the Democrats.

buzzsaw99 paulp Wed, 02/07/2018 - 08:14 Permalink

they used to say:  "take your six figure ira down the street to fidelity ya loser, we don't accept anyone who doesn't have at least five million"

now they say:  "would you like a payday loan?  do you want fries with that?"

in spite of their reported revenue and earnings they can't be doing well underneath.  fixed income in the shitter.  if it weren't for the tax cut they couldn't have been more than a few quarters away from a shitty report card.

In reply to by paulp

silverer Wed, 02/07/2018 - 08:23 Permalink

Gotta have that $1000.00 phone for your self esteem, self confidence and vanity? Or do you have a brain and realize you can buy a basic phone, which is all you really need beside your own brain (if it works), for about $50.00 new, or $10.00 used.

JibjeResearch Wed, 02/07/2018 - 08:45 Permalink

That's right... baitchezz......

Goldman owns Apple stocks...

Lending you money to buy Apple shits is great thing...

You owe money..., Goldman makes interest from you and get the high stock price...

 

Bwahahahhahaahahh

east of eden Wed, 02/07/2018 - 09:23 Permalink

Ha! Goldman Sucks reduced to financing iPhones. Doesn't get better than that.

Maybe the joooos will re-discover gfelte fish and unleavened bread.

They could benefit from losing some of that fat.

lynnybee Wed, 02/07/2018 - 09:34 Permalink

i was in an APPLE STORE for the very first time last week ....... i opened the door & it was party central.    people everywhere, groups of people, lines of people & $49 cell phone cases displayed on the walls; computers displayed on tables, etc.   the employees couldn't keep up ........ i had to wait 2 hrs to get a new battery for my old I-Phone6.    I wish for my old landline phone back, should never have gotten rid of it.   that was my first & last APPLE STORE experience..... will be going back to a track phone or no phone.