Goldman CEO "Need to Watch for Self-Cannibalization Effect"
US Average Deposit Interest Rate Over 10 Times Higher Savings Products
Major Bank Stocks Plunge on New York Stock Exchange After Announcement
IT company Apple’s new deposit product is signaling a major shift in the U.S. financial industry. Even Goldman Sachs, one of the largest investment banks in the U.S., is closely monitoring the situation.
On the 18th (local time), according to the U.S. economic media outlet CNBC, David Solomon, CEO of Goldman Sachs, mentioned Apple’s new financial product, the 'Apple Account,' during the first-quarter earnings call. Solomon said, "We are not overly concerned, but we are closely watching whether cannibalization will occur."
Cannibalization refers to a phenomenon where a company’s newly launched product does not contribute to increased sales but rather takes customers away from its existing products.
Apple announced the day before that it would launch the 'Apple Card Savings Account,' offering an annual yield of 4.15%, in partnership with Goldman Sachs. Apple Card customers in the U.S. can open an account and deposit up to the FDIC insurance limit of $250,000. Additionally, every time they use their Apple Card after opening the account, they can receive up to 3% cashback on their payment amount.
According to current information from the Federal Deposit Insurance Corporation (FDIC), the average deposit interest rate at U.S. banks is 0.37%. Apple has introduced a deposit product with a yield more than ten times higher than this.
Although Apple has partnered with Goldman Sachs to launch the new financial product, it could actually be detrimental to Goldman Sachs. Customers attracted by the high yield might close their existing accounts and move to Apple.
Regarding this, CEO Solomon explained, "We have been working closely on the overlap between Apple Card users and Goldman Sachs deposit holders," adding that "the overlap is smaller than expected."
He continued, "We welcome the funds deposited in Apple’s savings accounts because expanding the deposit base is always a good thing," but emphasized, "We definitely need to closely monitor whether cannibalization is occurring."
Meanwhile, Apple’s move to strengthen its financial services immediately caused ripples in the U.S. financial sector. On the 18th, during the New York stock market session, asset management firm State Street’s stock price plunged 9.18%, and BNY Mellon Bank’s stock price dropped 4.58%.
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