Apple has informed Goldman Sachs that it plans to end its credit card partnership within the next 12 to 15 months. The partnership, which began in 2019, has been a key part of Goldman’s efforts to expand into consumer lending. However, the bank has faced challenges in building a successful consumer business, and it has decided to retreat from this area (via The Wall Street Journal).

Goldman has discussed the possibility of handing over the Apple credit card program to American Express or Synchrony Financial. However, it is unclear so far whether either company will be interested in taking on the program.

For Apple, the partnership’s termination presents a setback in its services business, which has increasingly gained prominence as iPhone sales growth decelerates. Nevertheless, Apple’s services revenue remains on an upward trajectory, and the Goldman partnership likely represents a relatively small component of this revenue stream.

There are a number of reasons why the Apple and Goldman Sachs partnership has not been successful. One reason is that Apple has pushed for nearly all applicants to get approved for the card, which has pushed up loan losses for Goldman. Additionally, Apple has insisted that cardholders get their bill at the beginning of the month, which has overwhelmed Goldman customer service employees with cardholders’ calls at the start of each month.

Goldman’s retreat from consumer lending marks the culmination of its failed diversification strategy, which aimed to expand beyond its core clientele of large corporations, institutional investors, and high-net-worth individuals.

With this setback, Goldman is now turning back to focusing on its core businesses, which serve big corporate and investor clients and the ultrarich. The bank has also been trying to sell off its consumer lending assets. In October, it agreed to sell GreenSky, which specializes in making home-improvement loans, to a group of investors. It has also stopped processing personal loans and sold off most of those balances to other entities.

It is unclear whether Apple will line up a new issuer for the Apple Card. However, the company is still committed to its services business, and it is likely that it will continue to look for ways to expand its offerings.