Amazon Sizzles, Plenti Fizzles And Goldman Gets Its Consumer Banking Groove

It used to be that when “Goldman Sachs” was mentioned, it was in the context of the storied Wall Street investment banking firm trading and underwriting securities, advising on mergers and acquisitions, taking companies public and brokering deals.

Not so much anymore.

In recent years, its core trading business has slowed, and its capital market and merger businesses have been fairly flat. In an effort to find that growth, Goldman has now decided that it also wants to be a consumer and commercial bank. And it has spent much of the first three months of this year either developing or expanding its capacities in both areas.

The Big Bet on Consumer Services

Goldman’s first toe in the water was Marcus, its consumer banking and lending platform, said to be named after its founder.

According to figures released by Goldman in their Q1 earnings report, Marcus has issued $3 billion in new consumer loans since launching in October of 2016. And it seems that Goldman and Marcus have much bigger plans.

“We are pleased with the progress we are making on strategic initiatives within our consumer franchise,” Goldman CFO Martin Chavez noted during the quarterly earnings call with investors. “Our long-term vision for Marcus is to create the leading platform for millions of consumers to take control of their financial lives.”

The proposed expansion made some analysts a bit nervous. In fact, one of them asked Chavez during the earnings call whether Marcus was lending to consumers with less than stellar credit histories. Chavez demurred, and perhaps dodged a bit, noting that Goldman Sachs continues to “emphasize creditworthy customers, and the credit quality of our portfolio is performing in line with expectations.”

Chavez additionally noted that Marcus is the platform that will enable its consumer deposit banking businesses, as GS Bank was folded into the Marcus platform shortly after its launch. Chavez indicated that enhancements and investments in the customer banking experience could likely be expected in the near term.

“You can expect to continue to see us making investments,” Chavez said. “I’d expect that we’re highly likely to continue with bolt-on acquisitions.”

Note to industry.

The most recent of those “bolt-ons” was announced last weekend, with Goldman’s acquisition of Clarity Money.

Clarity is a financial management app designed to help consumers make better personal finance decisions by using machine learning to provide actionable, real-time financial advice to the consumer via the app.

Goldman Sachs said the acquisition of Clarity Money is “integral” to Marcus’ aim to create a platform where millions of people can borrow and save money that is transparent, easy and has the customers’ best interest in mind. The app will remain free to use, but will eventually be rebranded as a Marcus by Goldman Sachs service.

“Consumers want a better way to manage their finances,” said Stephen Scherr, chief executive officer of GS Bank and head of the consumer and commercial banking division (a sub-unit of Marcus), in a press release announcing the deal. “Clarity Money has pioneered a consumer-centric approach to personal finance that will help Marcus continue to put power in the hands of consumers.”

And Goldman, other recent news suggests, isn’t satisfied with just powering the consumer via financial services – it would like to power some enterprise-level firms as well.

The Dip into Commercial Banking

This week’s news on the planned expansion of commercial banking and lending services follows earlier moves that indicated Goldman is getting very serious about kick-starting a commercial banking business as well.

According to reports in The Wall Street Journal in early April, the bank has hired away a senior engineer at JPMorgan to develop cash management tools as it eyes an entrance into the commercial banking market.

Hari Moorthy is the senior engineer and JPMorgan partner who Goldman enlisted to develop cash management tools, account deposit tools and other financial products geared at large companies, similar to his previous focus at JPMorgan.

For Goldman Sachs, the push into commercial banking is somewhat of a departure. Reports indicate that the early push into the new market will be modest, at least in the beginning. According to internal sources familiar with the matter, Goldman is currently focusing more on technology than opening up physical spaces. It also hopes to find partner entities for some of these commercial banking products.

Goldman Sachs will face some tough competition in the commercial banking market, where JPMorgan, Citigroup, Bank of America and Wells Fargo are the leading players – and have been for a while.

Whether Goldman can compete in the space – or in consumer banking, for that matter – remains to be seen. After all, it’s not easy being the new kid on the playground.

But although new, Goldman Sachs is a big kid and a known player, not a no-name upstart trying to disrupt an established space. And they are moving fast, and aggressively.

And for that powerful – and, at this point, promising – of a segment play, they certainly earned the sizzle of the week.


Amazon Prime: 100 million of … anything … is nothing to sneeze at. The milestone has been reached for Amazon, which states that its Prime subscriber base is now above that lofty number. Here’s another number: five billion items shipped. That’s a lot of buying, with more to come.

Same-Day Delivery: It’s targeted by Target, which is expanding its options to the tune of 60 stores across Boston, New York, Chicago and other cities. In the final mile, Target does its level best to compete with Walmart and Amazon.

Mobile Banking: It shows outsized gains as banks show double-digit growth in the ranks here. Yes, the focus may have been on tax cuts and share buybacks and credit cards. But gleaned from the details is an inexorable trend that people are getting a lot more comfortable moving their money around at the speed of … byte.


Retail Workers: CEO Richard Liu envisions the day when retail workers go the way of the dodo – due to robo. The convergence of artificial intelligence and hardware means the rise of the machines may alter in-person commerce forever.

Plenti: Plenti is not enough, it seems, as Amex pulls the plug, finding that loyalty has its limits – or maybe loyalty to loyalty programs has its limits. The frequent shopper program has been shuttered, as it didn’t gain the traction the card giant had hoped. Not much of a surprise, really.

Crypto Traders: They’re getting increased scrutiny from New York Attorney General Eric Schneiderman. Welcome the Virtual Markets Integrity program, likely to make folks uncomfortable all over the virtual trading spectrum. The inquiry into 13 crypto firms? A baker’s dozen of worry, it looks like.



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