Apple Card: Five implications of the Apple and Goldman Sachs partnership

The Apple Card’s debut this fall received a lot of attention for the card’s physical attributes: its minimalist removal of visible numbers, the ‘reassuring’ 9-gram weight — even its premium titanium composition which can be damaged by denim. As the card enters its first holiday season,  there are at least five other  implications for consumer credit card newbies to consider.

1. Legacy as a Liability

For Apple’s part, Jenifer Bailey - VP of Apple Pay cited Goldman’s  lack of legacy technology to explain its choice of spouse for the Apple Card project, saying they “needed a partner that was up for the challenge of doing something bold and innovative.” The choice raises the issue of whether other banks and financial institutions, which Apple must have considered, are losing out on high-profile partnerships due to their legacy technology. The lack of visibility and inability to provide assurances over the potential risks and unknowns that come with legacy systems could be a potential deal breaker.

2. Different Experiences Matter

Beyond technology, some commentators also pointed out that Goldman Sachs lacks consumer operational experience. But, let’s not forget its start-up experience behind the Marcus brand which Goldman Sachs expects to contribute $1 billion in revenue by 2020. Specifically, Goldman’s Marcus brand also required a hyper-fast platform build, which ended up originating more than $4 billion in unsecured consumer loans and $23 billion in deposits in its first two years.

3. Partnering is Key

Where all the requisite assets – be they brand, permission, operating talent, technology, or supporting platforms – aren’t readily available in-house, partnering is key.

However, partnerships mean integrations and technologies talking to each other. While the partnership between Goldman Sachs and Apple may have involved limited proprietary technology integration, however, for most integrations involving legacy systems to go smoothly, technical due-diligence through software intelligence will be essential. System dependencies will have to be mapped out and considered to avoid any unintended consequences post the integration. Developers and architects overseeing such a project should use architectural mapping tools like CAST Imaging capable of  providing deep visibility across the whole system to get the full picture needed for informed decisions.

4. The Establishment Can Still Challenge

For established financial industry players, new market entrants such as the Apple Card should serve as further impetus for improvements. The imperative is to constantly co-create while modernizing the offerings and the platforms supporting them. An institution’s operational experience and its past investments in legacy platforms can be harvested for advantage. The key is to gain a deep understanding while developing and maintaining a dynamic plan to exploit valuable new functionality, modernize and improve lagging components, and leverage existing and potential partners. The journey begins with deep system, architectural, and code-level insights of their legacy systems and never stops even after platforms are in the cloud.

5. Partners is plural

Even an early success like Goldman’s Marcus required partners working behind the scenes to help build out the functionality critical to the bank’s retail aspirations. The same will be true for platforms and offerings across financial products, including mortgages, custody, settlements, lending, transfer agencies, claims and elsewhere. In fact, we can look at successful platforms such a Salesforce.com and Apple’s own iPhone to the prominent role that third-party players, including independent developers can have on the success of the platforms and their supporting marketplaces.  These are blueprints of what success may look like. Having knowledge and ready ability to share a deep view of the core platform with partner ecosystems will be key.

Conclusion

It will be interesting to watch the partnership of Apple and Goldman Sachs for Apple Card develop over time as it evolves and grows. It is likely the lessons from this innovative collaboration will show others why Software Intelligence is at the heart of business innovation.

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