There are lots of downsides to actually becoming a bank, though. It creates many restrictions on the kinds of things you can do, and unless it's the majority of your business, it's not something you want. Better to work with banks but not be a bank yourself.

I suppose it’s going to depend on how many willing partners are out there with an appetite to be beholden to Big Tech as the smaller partner with less leverage. Evolve just dumped a bunch of fintech partners over the last year (conversely, they were aggressive in who they were willing to partner with), and moving is not trivial. While Apple has deep pockets, I’m sure engineering time is better spent delighting users vs engineering around partner churning.

https://fintechbusinessweekly.substack.com/p/evolves-problem...

Depends if Apple really feels they can run a backoffice banking arm effectively and cheaper than a partner that is already at scale.

Underwriting credit & customer risk, handling edge cases, maintaining relationships with ATM networks, card networks and ensuring compliance with state and federal banking rules is quite an undertaking.

Goldman Sachs did not have scale like Chase, Capital One and others to create a diversified portfolio of clients, limiting their ability to hedge against the risks of a single platform or two dominating their involvement in this market. One bad software update by Apple could flood their support queues, and they can't afford to keep significant staff on hand to keep wait times below an hour (unlike a larger company, who is already staffed up to serve their non-Apple customers).

Is that still the case if the bank is a subsidiary?

Yes, the Bank Holding Company Act of 1956 regulates "any company which has control over any bank".

Hat tip. This part is so important. It prevents a non-bank from taking over a bank with the implicit goal of lending money to themselves. This would be a real danger.

This is the perfect opportunity for them to acquire Apple Bank https://www.applebank.com/