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Welcome to the Tearsheet PRO Newsletter

  • We're excited to introduce our new member-only newsletter, featuring fresh and exclusive content from Tearsheet Editors Zack Miller and Iulia Ciutina.
  • Tearsheet PRO is designed to connect the dots, challenge conventional thinking, and keep your finger on the pulse of established and emerging trends. In your inbox every Wednesday.

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Welcome to the Tearsheet PRO Newsletter

Welcome to the Tearsheet PRO Newsletter

Tearsheet Pro is your key to always staying one step ahead of the curve.

Tearsheet PRO is designed to connect the dots, challenge conventional thinking, and keep your finger on the pulse of established and emerging trends. In your inbox every Wednesday.

We're excited to introduce our new member-only newsletter, featuring fresh and exclusive content from Tearsheet Editors Zack Miller and Iulia Ciutina.

Happy reading!

Tearsheet PRO

In today's edition
  • Goldman Sachs' strategy change
  • TradFi is stepping up its SMB game
Coming up next week
  • What's going on at Stripe?
  • Fintechs still raising money in a down market

Marcus, I hardly knew ye

Goldman's aspirations failed to materialize - what now?


With Q4 22 results in the bag, little is going Goldman Sachs’ way right now. 

- Revenues down, expenses up: Revenue was down significantly (-16%) from a year earlier, while operating expenses jumped 11%. Investment banking fees (-48%) and asset & wealth management (-27%) contributed to the struggle. 

- Brain drain and expulsion: Goldman’s making its biggest round of layoffs since the 2008 financial crisis. Investment banking is also seeing defections.

- Underperforming its peers: While Goldman struggles, Morgan Stanley has taken a different approach in its evolution: doubling down on its fee-based investment management business. It seems to be working – MS has outperformed GS by 2x over the past 5 years.

Goldman had a bold, new vision.

We want to do what Amazon has done to retail, or what Apple has done to music, where you innovate on the distribution and consumption experience for the consumer,” said Harit Talwar, the executive who led the construction of Goldman Sachs’ consumer business, at Tearsheet’s Resilience Conference in 2021. “We want to give consumers a bank on a phone with products which are valuable, easy and transparent.

And it grew deposits. In terms of deposits, Goldman’s consumer business has done admirably. Starting from $0 six years ago, Goldman now has over $110 billion of deposits and 15 million customers on its platform.

But the firm’s digital transformation isn’t working. Spearheaded by its move into mainstreet banking with its Marcus brand, that unit has lost more than $3 billion since 2020. 

We tried to do too much too quickly,” CEO David Solomon said last week. “I think we probably in some places haven’t had all the talent that we needed to execute the way we wanted.”

Looking back, there were some dubious decisions.

- Goldman chose to build its own consumer technology in-house. That was an expensive endeavor, especially in light of the many fintechs it could have bought or partnered with.

- Lack of partnership success: Marcus landed an early partnership to back the Apple Card but the firm wasn’t successful replicating the scale of these types of partnerships.

- Executive turnover dogged the consumer unit. Marcus has lost much of its leadership over the past couple of years. What was Goldman’s loss was Walmart’s fintech group’s gain as it attracted many senior ex-GS folks.

Goldman Sachs has been a poster child for digital transformation. Over the past few years at Tearsheet, we pointed to Goldman Sachs as really the sole example of a storied Wall Street bank transforming itself away from its old business (IB and trading) to a new one. 

Where to go next? In the wake of poor results, the bank is restructuring its digital efforts.

Source: Goldman Sachs’ 8K

Less consumer, more embedded finance

Goldman is pulling back from its consumer business in favor of what it calls Platform Solutions, which consists of:

Embedded consumer products: Instead of acquiring new consumer deposits directly, GS wants to embed its products in other firms’ offerings, like it does with the Apple Card.

Transaction banking: The firm has built an API-only transaction bank working with large global firms on cash management and payments. 

Merchant BNPL: Goldman bought early BNPL provider GreenSky, which has focused on home improvement and healthcare lending, for $2.2 billion in 2021.

Will it work? Will a pared-back consumer group turning to embedded solutions succeed? Maybe, but it’s not necessarily in GS’ DNA to be a tech firm. It’s one thing to say you employ more engineers than Facebook, but another thing to compete as a tech firm.

Wall Street is skeptical, too. For the last 150 years, your strength has been serving your corporate relationships, investment banking. That’s your legacy, too, the strength there.  When I’m looking at this third division, Platform Solutions, the first two divisions are based on how you address the clients based on distribution, ‘One Goldman Sachs’ — whereas the third division, Platform Solutions, seems to be based on how you manufacture solutions. That just seems like a little disconnected,” said Wells Fargo Securities analyst Mike Mayo on the firm’s earnings call.

TradFi is stepping up its SMB game

Today, everyone wants to get a share of the pie.


If SMBs have been historically ignored by traditional finance, now it seems like everyone is paying attention. 

  • 27 million of SMBs have no employees and are run by solo entrepreneurs 
  • Of the remaining 6.2 million, 90% have fewer than 20 employees and 80% have fewer than 10 

Since most businesses are small, banks don’t offer them the same level of service as they would do for larger businesses or corporate accounts. 

But with the rise of digital, this is changing. Small businesses have options now, they can open checking accounts, get loans and manage their expenses online. They prefer integrated solutions and a unified banking experience that makes the life of an entrepreneur easier. 

And yes, many of these options are coming from fintechs, but more and more traditional players are also stepping up their SMB game through acquisitions, partnerships as well as building in-house solutions. 

American Express launched Business Blueprint, a new digital cash flow management hub built exclusively for SMBs

  • Amex has spent the last two years integrating fintech into its small business offering, using both acquisitions and partnerships to create a one-stop shop solution for SMBs
  • When it bought Kabbage in 2020, the plan was to create products that combine checking accounts with card products as well as lending solutions 
  • Amex partnered with Extend to allow SMBs to create virtual cards and have cash flow visibility, as well as with spend management platform Airbase 

Intuit launched QuickBooks Business Network, expanding its ecosystem in B2B territory

  • Invoices are a big pain point: QuickBooks processes $2 trillion in invoices, but payments remain a big pain point: 64% of businesses still have outstanding invoices, and 40% report getting paid late, making payments/invoicing a big focus area for the company. 
  • The B2B sector is starving for better financial solutions: 70% of B2B is still check-based. On QuickBooks, 52% of B2B businesses report being paid late compared to 38% of B2C businesses. 
  • QuickBooks Business Network aims to automate B2B payments and improve the overall cash flow: SMBs can search for other businesses in the ecosystem, and when an invoice comes in, it can be easily reviewed, approved, paid, and automatically added to its books 

JPMorgan Chase is investing heavily in its SMB offering, modernizing its point-of-sale hardware and software

  • Account integrations: Chase is focusing on account integrations, so customers can have 24/7 access to their merchant account, allowing them to transfer funds from their merchant account to their bank account or check credit card balances
  • Payments on the go: With QuickAccept, when a Chase customer accepts credit card payments, whether it's on the go, online, or in-store, they can deposit those funds into their bank account the same day. 
  • Business insights: With Chase Customer Insights, SMBs have the ability to gain insights out of their business in real time from their point-of-sale system

Weekly 10-Q

Check cashing fees are getting an overhaul from New York’s financial regulator
  • The New York State Department of Financial Services is putting into practice an updated check cashing regulation following the proposed regulation announced in June last year.
  • And, feeling the heat of the economic downturn, JPMorgan's board has decided that CEO Jamie Dimon will take home the same base pay in 2023 as he did last year -- with no special award or bonus.

Editor's picks

Just look at the charts

US customer primary financial services provider usage and satisfaction

This week's reads

Banks plan payment wallet to compete with PayPal, Apple Pay


Financial institutions behind Zelle are working on a wallet for consumers to use at online checkout.

The ‘Buy Now, Pay Later’ bubble is about to burst


Many Gen Zers have rejected traditional credit in favor of new-age layaway programs, which are riskier than they may seem.

Is Brazil the epicenter of fintech? In a word, yes.


Brazil has a history of hyperinflation and severe economic shocks and it could be this environment that has influenced the type of finance ecosystem that exists today. 

The new venture capitalists: How community banks are fueling the growth of fintech


Increasingly, banks are filling the void created by VCs. And not just the large megabanks.

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10-Q, Member Exclusive

Behind Citizens Bank’s evolving strategy in a crowded BNPL market

  • Citizens Pay's Christine Roberts shares insights on how Citizens Pay has evolved since its inception and if it has an edge over fintech BNPL lenders.
  • In other news, Arm and Instacart IPOs could be meaningful for Goldman Sachs to open new doors of revenue and IPO fees for the Wall Street firm.
Sara Khairi | September 25, 2023
10-Q, Member Exclusive

Chasing ambitions: SoFi elevates its game by participating in underwriting the Instacart IPO

  • Underwriting part of the Instacart IPO can be a big shot for SoFi, which went public in 2021 and is best known for student loan refinancing.
  • Also, Wall Street banks added modest gains to the IPO Index last week.
Sara Khairi | September 18, 2023
10-Q, Member Exclusive

Dime Community Bancshares steps into healthcare lending as part of its commercial banking expansion

  • Dime makes a move into the healthcare sector to offer financing solutions and support capital-intensive projects.
  • The CFPB is keeping tabs on Apple’s policy of limiting access to the NFC chip technology that makes Apple Pay the only mobile payment service that utilizes the ‘tap and go’ technology embedded in iOS devices limiting other companies from developing their own tap-to-pay apps for Apple devices.
Sara Khairi | September 11, 2023
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  • Can gain Wall Street's respect?
  • Federal Reserve Chair Jerome Powell on Friday warned that additional interest rate increases could be yet to come, as inflation is still above where policymakers feel comfortable.
Sara Khairi | August 28, 2023
10-Q, Member Exclusive

‘We still need to earn the trust of millions of Americans who are experiencing digital banking for the first time’: Dave’s Jason Wilk

  • Jason Wilk, CEO and founder of Dave, talks about second quarter results, challenges for neobanks at large, and what's in store for the firm in the months ahead.
  • Marqeta shares popped 8% last week as the firm extended its alliance with its largest customer, Block, through 2027 for transaction services for Cash App and Afterpay.
Sara Khairi | August 21, 2023
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