Apple Paused Plans for Stock Trading App with Goldman Sachs as Markets Slumped

HomeStock-MarketApple Paused Plans for Stock Trading App with Goldman Sachs as Markets...

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Apple was developing an iPhone feature that would have allowed users to easily buy and sell stocks in partnership with Goldman Sachs, according to three unnamed sources familiar with the plans. However, the tech giant decided to shelve the stock trading app last year as market volatility increased and stocks slumped.

The proposed stock trading feature would have built on Apple’s existing suite of financial products and services developed in collaboration with Goldman Sachs, including the Apple Card credit card launched in 2019, Apple Pay Later buy now, pay later loans introduced this year, and the Apple high-yield savings account offering launched in June 2022 which has already amassed over $10 billion in deposits.

Bringing commission-free stock trading to the iPhone would have put Apple in direct competition with fintech disruptors like Robinhood, SoFi and Square’s Cash App, as well as mainstream brokerages including Charles Schwab and Morgan Stanley’s E*Trade. It could have also raised regulatory concerns around Apple potentially exploiting its dominant position in the smartphone OS market to promote its own financial products and services.

Surging Retail Investing Activity Spurred Development

According to two sources, Apple and Goldman Sachs began exploring an integrated stock trading feature in 2020, when retail investing activity surged dramatically thanks to zero-commission trades, smartphone accessibility, work-from-home conditions during COVID lockdowns, stimulus check investments and the meme stock phenomenon.

Robinhood added over 3 million funded accounts in the first four months of 2020. Other trading apps also saw record growth. With spare cash and time on their hands stuck at home, consumers dabbled in day trading stocks, options, cryptocurrencies and more. An Apple stock trading feature would have capitalized on this trend.

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One potential use case envisioned was letting iPhone users invest spare cash directly into Apple shares, one source revealed. The company planned to introduce the trading functionality in 2022 based on progress at the time.

Market Downturn Led Apple to Shelve Launch Plans

But 2022 brought a very different investing environment, with the Federal Reserve hiking interest rates aggressively to fight high inflation, sending markets into a steep decline. The tech-heavy Nasdaq entered a bear market, dropping over 30% from all-time highs.

With consumers losing money in the downturn, Apple grew concerned that launching a stock trading platform could lead to user backlash if trading losses were seen as being facilitated by Apple technology, according to sources.

So Apple pivoted to focus on building up its Goldman-powered savings account product instead, given savers benefit from higher interest rates. The company put its stock trading app plans on the backburner for the foreseeable future.

It is unclear if or when Apple might revisit launch plans for the stock trading feature. But much of the underlying infrastructure is already in place if the company decides to pursue it down the road once markets stabilize and the regulatory environment becomes more favorable, one source noted.

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Goldman’s Shift Away From Consumer Businesses

Interestingly, Apple’s pause on the stock trading app coincided with Goldman Sachs strategically pulling back from consumer-facing businesses amid wider company changes.

While Apple Card and other collaborative offerings with Apple have been successful, Goldman’s consumer banking initiatives have reportedly undershot growth expectations and faced intense regulatory criticism.

Goldman CEO David Solomon has responded by putting the brakes on the bank’s consumer business expansion to refocus on core institutional strengths. As part of this shift, Goldman has explored selling off the Apple Card business to American Express.

So even if Apple decides to resurrect plans for a stock trading app in the future, it remains unclear whether Goldman would still be involved in light of its recent consumer finance pivot.

Intensifying Competition in Consumer Investing

Had Apple pursued its stock trading feature to completion, it would have entered an increasingly competitive arena. Companies like Robinhood, SoFi, Square and PayPal are targeting similar offerings and integrations.

Robinhood remains the dominant force in commission-free trading, though its meteoric early growth has slowed. PayPal actually abandoned its own plans to launch a stock trading service after originally announcing the initiative would be a priority.

Other tech giants also have designs on intersecting finance andinvesting products. Twitter owner Elon Musk is exploring letting users trade stocks and crypto within the app in partnership with eToro.

Apple would have needed to leverage the power of its 1 billion+ iPhone installed base and deliver a uniquely compelling trading experience to gain share in this market.

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Potential Regulatory Concerns
Offering seamless stock trading within Apple’s iOS ecosystem also could have raised regulatory red flags. Lawmakers and regulators are already concerned about Apple’s dominance of the smartphone market to favor its own services.

Integrating trading into Apple devices could be interpreted as unfairly exploiting Apple’s platform advantage. There are also worries around encouraging consumers new to investing to engage in active stock trading.

Robinhood has faced criticism for “gamifying” trading and allegedly misleading inexperienced retail traders. An Apple stock trading feature could have prompted similar questions.

Next Steps for Apple’s Financial Services

With stock trading on the back burner for now, Apple still has plenty of financial services initiatives in the pipeline.

The new high-yield savings account offering could be expanded with additional features for deposits, withdrawals and money management.

Further integration of Apple Card with Apple Pay installment plans could offer a more seamless credit and payments experience. More advanced person-to-person payment functionality through Apple Cash also has potential.

And augmented reality and virtual reality innovations could one day take financial services like banking, credit, investing and shopping to new immersive levels.

So while stock trading isn’t in Apple’s immediate plans, the company has only scratched the surface of what’s possible in financial technology. Despite the paused trading app, Apple continues exploring innovative ways tosynergize financial services with its devices and software ecosystem.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a seasoned basketball journalist with a passion for the WNBA and NBA. His insightful writing combines commentary and stats, providing comprehensive coverage. Alee sheds light on the overlooked WNBA while championing its players. He also delivers in-depth NBA analysis, offering unique perspectives on trades, drafts, and league dynamics. With exclusive interviews and behind-the-scenes access, Alee gives readers an unparalleled look into the lives of basketball's biggest stars.

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