Goldman Sachs launched an online consumer lending platform last month – an unusual move for the global investment bank – and many people are wondering why.
The loan tool, which you can find at Marcus.com, will offer free fixed rate personal loans of up to $ 30,000 for terms of two to six years. It is aimed at Americans with credit card debt over $ 10,000.
The launch marks a step towards consumer banking for Goldman, which is arguably the world’s best-known investment bank. The company launched a digital savings account on GSBank.com in April, offering customers an interest rate of 1.05% on their deposits, which can be as low as $ 1.
CEO Lloyd Blankfein gave an overview of this push during an interview with Andrew Ross Sorkin of the New York Times at the DealBook conference last week.
“Lending is an area that we haven’t done as much historically, as an investment bank, and so what we do is we build lending platforms and lending businesses,” said Blankfein.
“One of the places we thought we could go and have a relative advantage and fill a void is consumer credit,” he said. “Not because it’s a consumer business, but because it’s a very good business for us to go to.”
He said financial regulations are a real driver of the push, as they have deterred banks from getting into capital-intensive areas. He also highlighted the role that technology now plays in lending businesses, highlighting Goldman’s technological strength.
The loan is a risk management driven, digitally delivered service, Blankfein said, “at which we think we are good enough.”
He said that in 10 years, he hopes Goldman’s outstanding amount will be in the billions of dollars.
“Think about the amount of credit card debt – allowing people to finance that… really accomplishes a lot for consumers,” Blankfein said.
In summary, “We think we can manage the risk, we think we can deliver it, and it’s a good business, relatively safe and relatively inexpensive to capitalize,” Blankfein said. “This is a valuable niche that we must fill.
Goldman Sachs CFO Harvey Schwartz told Business Insider last month that a convergence of factors led Goldman to enter retail banking.
“The consumer and the market really presented themselves to us,” said Schwartz. “We have always had technological skills. We have always had skills in risk management. … It just converged for us in a way that works. And we’re a bank, so we can do it – and we can become profitable. Return.”
Schwartz added that if consumers weren’t using web platforms and instead relied on physical bank branches, “we probably wouldn’t be in the space.”