to customers, and some of the bank's executives described the product as the "most successful credit card launch ever," per the FT. As Goldman bids to swell its retail business, which accounted for less than 3% of revenue last year, the product gives it direct access to Apple's 100 million US customers — which is particularly valuable, considering the bank lacks the physical branch network its legacy bank rivals have.
And by partnering with a banking incumbent equipped to handle the regulatory requirements around lending, the tie-up presents Amazon with limited risk and drain on its resources. Amazon already lends to small businesses that use its platform, with its balance sheet at the end of 2019 standing at over $863 million, per the FT. Yet, the further it pushes into lending, the greater the regulatory and compliance scrutiny — and associated costs — it'll face.
Big tech's push into financial services is often framed as a threat to incumbent financial institutions — but fintechs are likely to be the biggest losers. Given the size of firms like Amazon — it's around 12 times bigger than Goldman by market cap, for instance — their push into financial services is viewed as an existential threat to established FIs.
So, we're likely to see a growth in partnerships between these firms and players like Goldman. And for fintechs, this spells trouble: The tech capabilities of Amazon and its peers combined with the regulatory know-how of incumbent FIs like Goldman is a powerful force.
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