Goldman Sachs and Wells Fargo are gearing up to go after the credit card lending industry as it seeks to access some of the $183 billion in fees and interest that comes along with credit card lending.
Bloomberg, citing comments from Goldman Sachs Chief Financial Officer Marty Chavez during an earnings conference call in April, reported Sachs may get into credit cards via Marcus, its online lender platform. Meanwhile, Bloomberg reported Wells Fargo is going after non-customers in the U.S., with credit card offers that come in the mail sent out later in 2018. For Goldman, the move is aimed at finding new businesses that have good returns. Wells Fargo needs a market where there are fees after the Federal Reserve hurt its business plans with the order that prevents Wells Fargo from growing beyond $2 trillion in assets. How the two companies will fare is up for debate, given the cutthroat nature of the market. “I don’t see either of them crushing it because it’s an extremely competitive business with very good players,” Gerard Cassidy, an analyst at RBC Capital Markets, told Bloomberg in the report. “You’ve got well-established players that are not going to roll over. It would be very challenging for these new entrants to dethrone them any time soon.”
Bloomberg noted that fees and interest that U.S. banks get from credit cards increased 12 percent from 2016 to 2017, with the average household paying $904 in interest each year. In 2017 U.S. banks earned $182.7 billion in interest and fees from credit cards, noted Bloomberg. Currently, Wells Fargo is in 7th place in the U.S. in the credit card market with about 4.3 percent market share. Meanwhile, Goldman Sachs has been hiring employees for Marcus that have credit card knowledge, recently naming Harit Talwar, the former head of Discover Financial Services' card business, to head up the digital finance efforts at Goldman Sachs. The report noted that Goldman has also brought on Scott Young and Anand Sivadasan, who had previously negotiated co-brand credit-card partnerships for Citigroup, and Shailesh Mendonca, a digital marketing executive from Capital One Financial Corp. It also brought on board a team from Final, a credit card startup that went out of business.