10-Q

Weekly 10-Q: Consumer finance amid rising inflation – 3 questions with the CFO at Marcus by Goldman Sachs, Liz Ewing

  • Liz Ewing, Chief Financial Officer at Marcus by Goldman Sachs, talks about inflation's impact on consumer finance and how to come to grips with the current economic climate.
  • And Pennsylvania's Lehigh County could be the first to walk away from Wells Fargo over its donations to anti-abortion groups.
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Weekly 10-Q: Consumer finance amid rising inflation – 3 questions with the CFO at Marcus by Goldman Sachs, Liz Ewing

10-Q provides weekly insight into the moves of top financial and fintech stocks over the past week. A new issue lands in your inbox every Friday. Stay ahead. Subscribe here.


Last week we covered: The big question — how are Wall Street banks performing this quarter?


Consumer finance amid rising inflation: 3 questions with the Chief Financial Officer at Marcus by Goldman Sachs, Liz Ewing

I asked Liz Ewing, Chief Financial Officer, at Marcus by Goldman Sachs, 3 questions about how inflation can impact consumer finance and how to come to grips with the current economic climate.

What differentiates Marcus from other players in the field of consumer finance?

Liz Ewing: Building our consumer business from scratch, without the restraints of legacy technology or branch debts, has made it possible for us to build a nimble and flexible technology stack. This allows us to develop innovative products that we then deliver directly to consumers through the Marcus brand, or by becoming deeply embedded in the ecosystems of our partners. All of this is backed by the resources and expertise of Goldman Sachs. Very few companies, let alone banks, can say the same. 

Where do you see Goldman’s consumer business 5 years from now, in terms of objectives and key results?

Liz Ewing: Ultimately, our goal is to change the relationship consumers have with their banks. We want to support consumers by elevating what their banking relationship can be with simple, transparent products that anticipate their needs and deliver value while meeting them where they are. We eventually hope to serve tens of millions of customers with the constant focus of keeping their best interests at the center of what we do. As we scale the consumer business to more products and distribution channels, we’re continuing to invest in the foundational elements that keep us connected to, and in conversation with, our customers.

How can inflation affect consumers’ finances and how can they weather the storm?

Liz Ewing: Rising inflation impacts the general cost of living. In time, it can slow economic growth since people have to spend more to buy less. When inflation is too high, the Fed tends to raise its federal funds rate, which, can influence the interest rates banks offer across various deposit accounts and other products like mortgages and personal loans. When the federal fund rate increases, the prime rate goes up and credit card APRs generally increase as well. Those with outstanding and higher APR debts in this rate environment might want to consider a personal loan for debt consolidation. This kind of loan can be used to combine multiple debts into a single debt. Consolidating debt with a personal loan can also have the advantage of a fixed rate, which can be an attractive option with interest rates on the rise.


Top stories of the week

AMAZON
Amazon pilots a new wallet for sellers
Amazon is rolling out an Amazon Seller Wallet that aims to help sellers convert, manage, and disburse funds from their seller accounts to their bank accounts — and better facilitate cross-border commerce. The move comes as the company is experiencing deceleration in sales — impacting the numerous independent sellers whose digital storefronts generate a high volume of Amazon orders. (Payments Dive)

AMEX
Amex collaborates with Cardless

American Express is collaborating with Cardless to let the country’s most recognized brands issue cards, leveraging the Cardless platform. The partnership will let customers enjoy unique rewards from their favorite brands and access exclusive offers by Amex for shopping, travel, dining services, entertainment, etc. — and Global Dining Access by Resy, as well. (IBS Intelligence)

APPLE
CFPB warns of Apple’s push into lending

While the CFPB has apprehensions over tech entering the BNPL space, there is also scrutiny of whether Apple is misusing consumer data with its Pay Later service. According to CFPB Director, Rohit Chopra, Big Techs’ ambitions eye to exercise control over digital wallets when entering the BNPL space – as they’re good at mobile operating systems, which can lead to them exploiting data and eCommerce more broadly. (PYMNTS)

BANK OF AMERICA
Americans’ cash flow is still positive, despite the pressure of inflation – says BofA’s CEO

The American consumer is still strong despite roaring inflation, and that will pose a challenge to the Federal Reserve’s mission to tamp down inflation, according to Bank of America CEO Brian Moynihan. Moynihan’s comments come after the Fed hiked interest rates by 0.75% and hinted it could take a mellow approach with future rising rates. (CNBC)

BARCLAYS
Barclays’ miscalculations dent solid trading profit

Barclays faced a major blow of 1.9 billion pounds ($2.3 billion) in its profit due to regulatory blunders, including having to buy back billions of dollars of securities the bank sold in error. The bank reported a pretax profit of 3.7 billion pounds for the first half of 2022, down from 4.9 billion pounds in the first half of 2021. The results show how errors wreaked havoc with an otherwise strong performance by the bank – in the first year tenure of CEO C.S. Venkatakrishnan. (Reuters)

CITI
Citi seems to be in safe hands – currently

Citi’s profits plummeted from last year, but its revenues of $19.6 billion and net income of $4.5 billion made progress as opposed to the analysts’ expectations this quarter. The results were strong in areas CEO Jane Fraser has slated for further investment, like Treasury and Citi’s Trade Solutions business. (FT)

COINBASE
Coinbase shares drop 20% after SEC probe

Shares of Coinbase closed down more than 20% on Tuesday after reports of an SEC investigation surfaced – scrutinizing whether the company illegitimately lets users trade digital assets that haven’t been registered as securities. More than 75% of Coinbase’s valuation has been wiped out this year. (CoinDesk)

JPMORGAN CHASE
Chase and Instacart launch the first credit card for grocery delivery fans

Chase and US-based retail enablement platform Instacart have launched a new Instacart Mastercard credit card — to offer a way for users to access rewards both on and off the Instacart platform. From the weekly grocery shop to beauty products and sports equipment to household essentials, cardmembers will be rewarded with cash back on every purchase from many retailers. (The Paypers)

LENDINGCLUB
LendingClub posts second quarter 2022 results

LendingClub reported revenue of $330 million , up 61% year-over-year, driven by growth in net interest income and marketplace revenue. The recurring stream of net interest income increased 153% to $116 million. The firm’s marketplace bank model, member and data advantages, and focused underwriting were contributing factors for both revenue and profitability in this quarter, according to CEO, Scott Sanborn. (Seeking Alpha)

ROBINHOOD
Is Robinhood’s CEO rattled amid a sticky situation – or doesn’t show it?

Robinhood has lost more than $4 billion in the past five quarters and has seen its stock plummet 77% since last July’s IPO. The road has become rockier for the company in recent times — as stagnating user growth and a broad decline in trading were in tune with layoffs, not to mention a potential regulatory overhaul that could risk a key source of revenue. However, CEO Vlad Tenev appears unruffled from all the crises and is bullish on accumulating as many users as possible, regardless of how often they trade or how little money they hold in their accounts. (Bloomberg)

WELLS FARGO
It’s time to walk the talk for Wells Fargo

Citing Wells Fargo’s continuous donations to anti-abortion groups, Pennsylvania’s Lehigh County wants to find a new bank for $145 million in assets. It emerged the bank donated over $120,000 to the anti-abortion National Republican Senatorial and Congressional Committees for the 2022 election cycle. On the other hand, Wells Fargo committed to reimburse employees and their dependents for travel and lodging costs associated with traveling for healthcare services, such as abortions – right after the reversal of Roe v. Wade last month. (Banking Dive)

VISA
Consumers are using their cards to pay for it all

Visa’s Q3 results highlight a surge of post-pandemic spending levels in major categories — particularly in travel, entertainment, and even corporate travel. The company reported that overall payments volume was up 8% in nominal terms to $2.9 trillion, credit volume was up 16% in nominal terms to $1.5 trillion, and debit gained 1% to $1.4 trillion. Additionally, cross-border volumes jumped by 28%. (PYMNTS)


Tweets of the week

1.

Source: Lisa Abramowicz

2.

Source: Pink Peonies 2014

Charts of the week

1.  Replacing cash quickly

Source: David Jimenez Maireles

2. What is the best payment gateway for eCommerce?

Source: greenice

What’s trending

Mastercard expands its Installments program (Finextra)

Coinbase has joined a $2 million seed funding round for Bloomberg for crypto (Finextra)

How Huntington Bank weaves marketing into its strategic framework (The Financial Brand)


Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

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