According to sources, with the surge in the U.S. stock market in 2020, many retail investors have begun to come into contact with new-generation stock trading applications such as Robinhood. Under such circumstances, Apple and Goldman Sachs have collaborated to develop new stock trading services to help retail investors buy and sell stocks. However, according to sources, the project was shelved last year due to the decline in the U.S. stock market. Apple and Goldman Sachs declined to comment.
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The newly developed features were originally planned to be added to Apple Financial Services, which is backed by Goldman Sachs. Apple began cooperating with Goldman Sachs to provide credit cards in 2019, and later added buy now, pay later (BNPL) consumer loan services, and high-yield savings services. Apple said last month that user deposit balances on the service had exceeded $10 billion.
Apple began developing investment services during the COVID-19 pandemic. At that time, many users were quarantined at home and therefore had more time and money to invest in stock trading, which drove stocks such as GameStop and AMC to rise sharply. And many users are using their smartphones to trade stocks.
Two sources said that this cooperation between Apple and Goldman Sachs began during the market rise cycle in 2020, and Apple originally planned to launch investment services in 2022. Sources said that one use case envisioned by Apple executives is that if users have spare funds in their iPhones, they can put the funds into buying Apple stock.
However, the market was adversely affected by the surge in inflation and the Federal Reserve's interest rate hikes. Under such circumstances, the Apple team is worried that if investors buy and sell stocks with Apple's help but suffer losses, it will cause dissatisfaction among users. Subsequently, Apple and Goldman Sachs adjusted their strategies and accelerated the launch of savings accounts. In the current market conditions, savings account services benefit from higher interest rates on deposits.
The future of the stock-trading service is unclear now that Goldman Sachs CEO David Solomon is under pressure from within and outside the company to shrink his retail banking business. One source said the infrastructure has been completed and the current version is ready for release if Apple ultimately decides to launch the service.
Three years ago, Apple launched the AppleCard credit card service with great fanfare. However, as the user base expanded, the business attracted close attention from regulators and caused Apple losses. Earlier this year, Goldman Sachs launched a high-interest savings account service for AppleCard users, providing deposit products with an annual yield of up to 4.15%.
Goldman Sachs is also the core of Apple’s pay-now service. According to Apple's product introduction page, the product, called Apple Pay Later, can be used to place orders of $50 to $100 on "most websites and apps that accept Apple Pay." Users can choose to pay in up to four installments over six weeks without incurring interest or fees.
According to sources, before Goldman Sachs decided to shrink its retail banking business, the company had considered expanding its cooperation with Apple. Recently, Goldman Sachs is discussing selling its credit card and savings account businesses to American Express.
If plans for a stock trading service go forward, Apple will face fierce competition in this new market, including emerging companies such as Robinhood, SoFi and Block's Square, as well as established securities companies such as Charles Schwab and Morgan Stanley's E-Trade.
Stock trading services have become another way for financial companies to retain users on the platform and increase user activity. One source said Apple was considering a similar approach. However, this strategy has attracted the attention of regulators. Currently, regulators are reviewing the practices of Apple's App Store. Robinhood has also come under regulatory scrutiny for promoting the "gamification" of stock trading.
In addition to Apple, other technology companies are also entering this field. Elon Musk’s X company is working on a way for users to trade stocks and cryptocurrencies through X’s partnership with eToro. In 2021, PayPal hired an important industry executive and planned to launch a stock trading service. But the company later abandoned the plan and said on an earnings call that it would cut expenses and refocus on its core e-commerce transaction services.