Marcus by Goldman Sachs: Digital Finance

Goldman Sachs was recently honored by Fast Company as one of the most innovative companies in finance. Head of Digital Finance Harit Talwar discusses the culture of innovation behind Marcus, the firm’s first consumer digital lending platform, and what it’s been like building a start-up within a nearly 150-year-old company.

On innovation, Harit notes: “The real secret sauce is when you use your technology and data capabilities and balance sheet capabilities to help customers empower themselves and meet their needs. That’s what innovation is all about.”

Marcus by Goldman Sachs®is an online platform offering no-fee personal loans and high-yield savings accounts to consumers.

Named after Marcus Goldman, one of the firm’s founders, Marcus by Goldman Sachs relies on the strength and heritage of a 148-year-old financial institution to provide consumers with transparent and simple approaches to achieve financial well-being. Marcus offers:

• No fees. Ever.

• Fixed interest rates throughout the life of the loan.

• Ability to choose monthly payment dates and options.

• Dedicated loan specialists based in the US who deliver live, personalized support.

• Rates higher than the national average.

• No transaction fees.

• FDIC insured to the maximum allowed by law.

• Dedicated saving specialists based in the US who deliver live, personalized support.

As technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.

When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”

46% of Goldman Sachs job postings are in technology.
Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
Goldman has pushed investments into Brazil.
Goldman made its first fintech acquisition in 2016 and is looking for more.
Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.

Goldman Sachs has agreed acquire Final, an Oakland-based credit card startup.Final offered a unique kind of credit card, one that would create a different virtual card number for every merchant, thereby reducing the risk of credit card fraud.

With Final, Goldman gains about a dozen engineers and product managers with experience building a consumer finance product from scratch. When they arrive at Goldman in the spring, they will join a growing roster of consumer-oriented employees, all part of the bank’s new Consumer and Commercial Banking division.

By targeting prime borrowers looking to refinance their credit card debt, Marcus was able to issue over $2 billion in personal loans in its first year of operation. Goldman is able to fund Marcus’s loans using its own balance sheet, unlike online lending startups dependent on outside capital. According to the Wall Street Journal, the bank is now exploring products complementary to Marcus, like mortgages and ecommerce loans, as it looks to pour another $28 billion into lending over the next three years.

Goldman has also grown its consumer presence via acquisition.
Acquisition of GE Capital Bank – this jumpstarted GS Bank giving it a huge deposit base.
Acquisition of Honest Dollar – the digital retirement savings app was acquired in March 2016.
Launch of Marcus with debt consolidation loans.
Acquisition of Genesis Capital – not really consumer facing but could add a real estate development arm to the bank.
Bond Street – employees of the online small business lender moved to Goldman Sachs.
Addition of home improvement loans to the Marcus offerings.

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