‘Creating a digital storefront’: Why Goldman Sachs’ Marcus bought a two-year-old PFM app

The Goldman Sachs acceleration into consumer banking continues. The investment banking giant’s consumer business Marcus confirmed the months-old rumor that it has acquired Clarity Money late Sunday. Marcus, which reportedly paid an undisclosed eight-figure sum for the personal finance startup, plans to integrate it into the Marcus offering “over time,” Harit Talwar, head of digital finance at Goldman Sachs, said on a conference call with journalists Monday morning. Clarity is a mobile app that lets users link their bank accounts — including Marcus savings accounts, though it plans to introduce account opening directly through Clarity over “the next few months” — and accounts with other financial providers, like SoFi, Acorns and Lemonade, manage them all on the platform. It pushes spending insights and helps automate and manage savings goals, credit scores and recurring bill payments. It also promotes credit cards based on users’ financial data. Even though it’s now owned by Goldman Sachs, the app will continue to function and operate as it has for the past year and a half that it’s been in the market, Talwar said. It will continue to offer the products and services to customers on the app, and in the near future, Marcus products will be an option too. That strategy is similar to the forthcoming redesign of the Citi mobile banking app, which will allow users to aggregate all their financial data into a single app whether or not they’re Citi customers. It’s a new model for large banking institutions, which historically would try to lock customers into a banking relationship and sell only products from their particular institutions. Today, banks are investing in and integrating technological innovations that allow them to be consumer-centric instead of product-centric. “The modern consumer bank is creating a digital storefront where people feel they can get to and get control of their finances,” Talwar said. Companies like Goldman Sachs and Citi may have the financial resources to build a financial services marketplace — Goldman has an entire global investment banking division and Citi has a heavy focus on its affluent customers — but it’s not entirely clear if they bring in a near-term tangible ROI. But that’s beside the point, Talwar said; it’s not a short-term monetization play. “There is tangible financial value, but we don’t want to underestimate the strategic consumer-centric value which improves over time,” he said. “This is very important for our shareholders too. It gives us competitive advantage in making our relationships with our loans and deposits customers over time stickier, gives us the ability to manufacture more products for the customer, and, yes, there is also revenue that Clarity Money in its existing operating model gets by distributing products and services for others.” Marcus plans to eventually introduce credit cards, wealth management and retirement offerings. It has about 350,000 customers across its savings and loan products, and plans to quadruple that number once it inherits Clarity's 1 million customers. These deals are usually as much about bringing in good talent as well as the products themselves, Talwar said; 25 employees in engineering, marketing, design and product will join Marcus, and CEO Adam Dell will join as a partner. Goldman Sachs has made more fintech acquisitions in the last two years than any U.S. bank, including hiring the team from small business online lender Bond Street and the credit card startup Final. "Challenges courting talent in these fields are significant, and Clarity gives GS an express lane to building out its design and engineering resources," said Jordan McKee, an analyst at 451 Research. "I view the addition of Clarity’s customers as a tertiary benefit of the deal – one that is obviously still significant but to a lesser extent than the technology and talent that GS adds with the acquisition."