Banking

New York Banks Should Get Into Online Lending

Online lending may be dominated by startup companies based outside of New York, but the New York State Department of Financial Services (NYDFS) wants New York banks to get into the business as well.

“Your competitors are, and will, be embracing FinTech in all of its various forms,” said Maria Vullo, NYDFS superintendent, referring to new types of financial services technology, according to a report by Reuters. “Don’t be left behind.”

The NYDFS, which oversees New York’s state-chartered banks, has reportedly held talks with a number of banks that are thinking about getting into online lending. The products could help serve lower-income people who live in New York and don’t have access to banking. The report noted Vullo’s remarks follow the launch last week of Goldman Sachs’ online lending platform, dubbed Marcus. The business, Marcus by Goldman Sachs, will offer uncollateralized personal loans of up to $30,000 to prime borrowers. The loans can be paid off in two to six years. This type of borrower typically has a credit score of at least 640, noted Reuters.

When launching Marcus, Goldman Sachs said Marcus provides consumers with a transparent and simple approach to consolidate their high-interest credit card debt.

“For many who manage debt payments on high-interest rate credit cards, a straightforward personal loan is a better solution,” said Harit Talwar, head of Marcus by Goldman Sachs, in a press release. “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.”

According to Goldman Sachs, the Marcus team listened to thousands of consumers share their experiences managing personal debt. This feedback was central to the design of the Marcus personal loan product and the customer experience. Some of the feedback the team heard included that consumers are tired of hidden fees, are stressed by unexpected changes in interest rates on credit cards and are disgruntled by pre-assigned payment dates and limited payment options — three things Marcus does not have. What’s more, Goldman Sachs said consumers are frustrated with automated machines instead of being able to speak to someone directly when they need assistance. Marcus has U.S.-based, dedicated loan specialists who deliver live, personalized support.

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