Per WSJ:

The Wall Street firm is in talks with American Express to take over its Apple credit card and other ventures with the tech giant, according to people familiar with the matter.

Now it is in talks to offload those businesses and its credit-card partnership to Amex, according to people familiar with the discussions. Goldman has also discussed transferring its card partnership with General Motors to Amex or another issuer, some of the people said.

A deal with Amex isn’t imminent or assured, people familiar with the conversations said, and it could take a while to transfer the partnership in any case. Apple would have to agree to a transfer. The tech company is aware of the talks, which have been ongoing for months, the people said.

Goldman Sachs’ (GS) attempt to offload the entire consumer banking division shows that consumer bank is extremely challenging. Even for a bank with vast resources at its disposal.

A lot of observers will be quick to pin the blame on Apple for losses that GS has to take. The sentiment is not factually wrong, but it misses the big picture. As someone who works in the banking industry, I believe that whether GS partners with Apple or a smaller brand to begin with, the journey will always be challenging. The complexity and sheer amount of work required to operate competitive consumer banking products are mind-blowing. How many well-funded fintechs successfully scaled their banking platforms over the last decade? A newcomer needs time, execution, focus and investments in order to succeed. Scratch that, in order to have a shot at success. Apparently, GS doesn’t think that it can wait that long and will be willing to commit more resources.

I find the decision to choose American Express as a potential suitor very interesting. Amex is a global network that is accepted at thousands of merchants. However, it’s still not as widely available as Visa and Mastercard. Because Apple wants its card to be used everywhere and holds the power to veto any transfer, will the tech company sanction this relocation of its banking services?

The technical challenges of transferring Apple Card to Amex will be monumental. The card is currently on the Mastercard rail. Changing networks from Mastercard to Amex is never easy as each has its own rules and characteristics. Expect to have weeks, if not months, of work behind the scene to make the switch happen. Plus, Apple Card curiously only has one universal cycle end for everyone at the end of each month. That’s not how traditional issuers, including Amex, operate. Usually, a customer’s cycle end date will depend on when they open their card. Will Amex keep the same setup or will it rewrite all the term for existing and future customers? This decision will have cascading consequences on operations, customer care and reporting.

From a business perspective, the Apple Card and other services present a boost to Amex’s books. In Apple Card, Amex would receive a kicker of around at least $13 billion in balance and a sticky as well as active customer base. In Apple Savings, the issuer would get around $1 billion in deposits. However, there are costs to pay. Apple Card has much higher delinquency and loss rates than Amex’s consumer book in the US. In this high-interest rate environment, it’s expensive for any issuer to hold balance from 0% for 24 month program that Apple Card users enjoy. With 4.25% APY, Apple Savings would also be expensive. Would Amex be willing to take on these risks and extra expenses?

Working with Apple has pros and cons. Any financial institution working with Apple will never have to worry about Marketing. The tech giant will do a better job at selling its branded products and services than any company can ever hope. On the other hand, Apple demands a lot from its partner. Think about what Apple has made Goldman Sachs do: no fee for Apple Card, ability to split Apple purchases into monthly installments, Buy Now Pay Later and Apple Savings. Any suitor will need to have an infrastructure advanced enough to accommodate such demands and convince Apple. Based on my observation, Amex should be able to answer the call. But would they?

The tricky part here is that Amex is a more mature issuer than Goldman Sachs. At this stage of its business life, Amex doesn’t need Apple as much as the renowned investment bank, and therefore, won’t make as many concessions as GS did. The difference in the dynamic will make this negotiation a tough one. I do think that because financial services are integral to Apple and the long-term risk in an unmotivated partner like Goldman Sachs is palpable, the $3 trillion company will be more motivated to find a compromise.

With all these factors in play, I don’t expect any transfer to happen in the next 12 months and that’s already a tad too optimistic. Based on the recent developments at Goldman Sachs, I think the investment bank will do its utmost to make this move a reality. But it’s going to be an arduous, time-consuming and complex journey.