A Stock-trading Feature Was Planned for the Iphone Until Markets Turned Last Year

In the backdrop of a surging equities market in 2020, characterized by a surge in retail trading facilitated by platforms like Robinhood, it has come to light that both Apple and Goldman Sachs were engaged in the development of an investment feature. This feature was envisioned to empower consumers to engage in buying and selling stocks, as disclosed by three individuals familiar with the matter.

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Regrettably, the project was shelved last year, as market conditions took a downturn, as conveyed by sources who have chosen to remain anonymous due to a lack of authorization to disclose this information.

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This unreported initiative would have further augmented Apple's portfolio of financial offerings in collaboration with Goldman Sachs. The initial partnership between Apple and the esteemed Wall Street institution commenced with the introduction of a credit card in 2019, followed by the inclusion of buy now, pay later (BNPL) loans and a high-yield savings account. It is noteworthy that Apple announced last month that its savings account had accumulated over $10 billion in user deposits.

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Both Apple and Goldman Sachs have declined to comment on this matter.

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The development of the investing feature by Apple transpired during a period of historically low interest rates, coinciding with the COVID-19 pandemic when individuals found themselves confined to their homes, thereby directing a significant portion of their record savings towards stock trading activities. Apple's discussions with Goldman Sachs were initiated during this heightened trading activity in 2020. Progress was made, and the Apple investing feature was initially intended for a 2022 launch. One hypothetical scenario pitched by executives involved iPhone users being able to invest surplus funds into Apple shares.

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However, as financial markets became turbulent due to escalating interest rates and surging inflation, the Apple team grew concerned about potential user backlash if individuals incurred losses in the stock market while using an Apple product as an investment tool. It was at this juncture that Apple and Goldman Sachs pivoted towards the launch of savings accounts, which are more resilient to the impact of higher interest rates.

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The current status of the stock-trading project remains uncertain following Goldman CEO David Solomon's decision to retrench from nearly all of the bank's consumer-focused endeavors due to internal and external pressures. Nevertheless, one source indicates that the infrastructure for the investing feature is largely developed and ready for deployment should Apple decide to proceed with it in the future.

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While the Apple Card made a high-profile debut three years ago, it also drew regulatory scrutiny and incurred losses as its user base expanded. Earlier this year, Goldman introduced a high-interest savings account for Apple Card users, offering a 4.15% annual percentage yield.

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Goldman Sachs played a central role in Apple's BNPL offering, known as Apple Pay Later, which allows purchases of $50 to $100 to be split into four payments over six weeks without interest or fees, applicable at most websites and apps accepting Apple Pay.

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Before Goldman's strategic shift away from retail banking, discussions revolved around expanding its partnership with Apple. More recently, Goldman explored the possibility of transferring both its card and savings account operations to American Express.

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Had plans for the trading app materialized, Apple would have entered a highly competitive market, contending with established players such as Robinhood, SoFi, Square (Block), and traditional brokerage firms like Charles Schwab and Morgan Stanley's E-Trade. The pursuit of stock trading aligns with the broader industry trend, wherein financial institutions seek to retain and engage customers by diversifying their offerings. This strategic move could attract regulatory attention, given ongoing scrutiny of Apple's App Store practices and inquiries into perceived market "gamification," as seen with Robinhood.

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Several other tech companies have also ventured into this space. Elon Musk's X, formerly Twitter, is exploring ways to enable users to buy stocks and cryptocurrencies through a partnership with eToro. Additionally, PayPal had previously expressed intentions to enter stock trading after appointing a prominent industry executive in 2021. However, the company later abandoned these plans, opting to refocus on its core e-commerce activities and reduce spending, as stated during an earnings call.

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