Goldman Sachs launches its consumer lending platform Marcus
Goldman Sachs, one of the most storied investment banks on Wall Street, is getting into the consumer finance business with the launch of an online lending platform, Marcus.
Named after one of the banks founders, Marcus Goldman, the business will offer unsecured personal loans of up to $30,000 and is targeting prime borrowers who may be looking to consolidate their credit card debt, or those that are frustrated with the fees and complexity of other lenders. The Marcus platform will offer two-to-six-year fixed rate loans at interest rates of between 5.99% to 22.99%, and is being positioned as a consumer friendly lending alternative due to a lack of origination and prepayment fees, flexible payment dates, and overall simplicity.
“For many who manage debt payments on high-interest rate credit cards, a straight-forward personal loan is a better solution,” said Harit Talwar, head of Marcus by Goldman Sachs. “Marcus offers an option for consumers who are searching for a simpler alternative to credit card borrowing, where rates can change and multiple fees can be charged,” Talwar added.
Consumer lending is new territory for Goldman Sachs, but the investment bank believes its strengths in risk management and technology have an application in Main Street finance. This is especially the case as borrowers move their banking to digital-first platforms and begin to adopt new lending models such as marketplace loans.
Goldman also sees an opportunity to enter the market as fintech firms like LendingClub struggle with operational problems and large banks rationalize brick and mortar branch networks. On one hand, Goldman has been on the forefront of this fintech revolution, seeding platforms ranging from Kensho to Symphony and training many of Wall Street’s most successful quantitative traders. But the bank also has a near $900 billion balance sheet from which it can give a lending operation heft versus standalone platforms.
“Digital technology is making large brick and mortar branches questionable… The traditional distribution strengths of of some of the large banks, in my view, have become legacy costs,” Talwar said in a recent podcast detailing Marcus by Goldman Sachs. He noted that new developments in fintech have given lenders the ability to make loans based on formulas and quantitative metrics, instead of qualitative judgement, something that plays into Goldman’s hands.
“Leveraging risk management, data analytics has always been in our DNA.,” Talwar said.
marcus, named after marcus goldman..
“Consumer lending is new territory for Goldman Sachs, but the investment bank believes its strengths in risk management and technology have an application in Main Street finance. This is especially the case as borrowers move their banking to digital-first platforms and begin to adopt new lending models such as marketplace loans.”
new ways to fleece some consumers..