Business of Fintech

What’s Goldman Sachs doing in online consumer lending?

close

Email a Friend

What’s Goldman Sachs doing in online consumer lending?

Goldman has ambitious plans to offer loans of a few thousand dollars to ordinary Americans and compete with Main Street banks and other lenders. Goldman Sachs has built its brand on handling the portfolios of the rich and powerful. For 146 years, the venerable bank has provided all kinds of financial services, including banking and investment management to thousands of clients– individuals and businesses — globally.

In June, Goldman Sachs communicated that it was further investing in its consumer lending business. Lending a few thousands dollars to a family to remodel a kitchen is a far way from underwriting top tech IPOs, but GS looks serious about investing in its consumer lending offering. Goldman can do this given the fact that it converted to being a consumer bank from an investment bank during the financial crisis — enabling it to take on deposits.

While its activities seem to be in the early planning stage, Goldman’s interest appears to center around providing small loans of a few thousand dollars to Main Street, pitting it competitively alongside consumer banks and marketplace lenders like Lending Club and Prosper. It doesn’t appear that the company intends to establish a marketplace around its lending product (like Lending Club), opting instead to lend off its own balance sheet. Further signaling its intentions to the market, GS hired Harit Talwar, Discover Financial’s former CMO, to head its consumer unit.

Then, in August, Goldman Sachs acquired GE Capital Bank’s online deposit platform. As part of the purchase, GS will take on $16 billion in deposits, made up of $8 billion in online-deposit accounts and $8 billion in brokered CDs. Dozens of employees were targeted with expertise in areas including marketing, credit and engineering, according to one of the people. Without the onus of maintaining local branches, the global bank is quickly putting the pieces together to be a serious competitor in online consumer banking.

Now, Goldman Sachs is trying to poach top management from its newly-found competitors in a market that’s quite competitive for talent. Lending Club’s recent IPO may still have senior leaders there locked up on selling shares and the recent performance of top firms like Prosper make for a competitive recruiting environment. “We have recruited talent from a wide array of industries to build a team with diverse experiences,”Andrew Williams, spokesman for Goldman Sachs said in a statement. According to Bloomberg Businessweek, GS is contacting senior level players at firms in New York and San Francisco and it appears to be having some success: according to employees’ LinkedIn profiles,individuals have joined Goldman Sach’s online lending group from  Citigroup Inc., Barclays Plc, American Express Co. and Discover Financial Services.

Goldman Sachs is a technology firm

For years, GS has been trying to convince the public that at its heart, it’s a technology company. Numerous managers have emphasized that Goldman Sachs has more engineers than Facebook — from CEO, Lloyd Blankfein all the way down the ranks. From internally developed products and services to investing in rising fintech stars, GS is active. It’s one of the banking firms behind Symphony, a communications app that just raised $100M and is taking on secure messaging in financial markets and beyond — taking aim at Bloomberg’s sweet spot.

0 comments on “What’s Goldman Sachs doing in online consumer lending?”

Business of Fintech, Creating win-win partnerships

How to build a fintech: Why BM Technologies’ Luvleen Sidhu pivoted to B2B2C and notes on partnerships and female leadership

  • BM Technologies' Luvleen Sidhu takes us through why her firm went from a purely B2C strategy to a B2B2C one and what impact it had on profitability.
  • Sidhu offers insight into what it takes to run a successful partnership, how the WFH and hybrid structures impact the workforce, and what responsibilities does the role of CEO entail.
Rabab Ahsan | September 10, 2024
Banking as a service, Business of Fintech, Creating win-win partnerships, Embedded Finance

How to run a BaaS relationship, a guide for fintechs and banks

  • The biggest problem in the current intermediary-reliant BaaS set up is that it makes it very hard to isolate who is responsible for what, and in so doing, complicates risk mitigation strategies.
  • These relationships have now come home to roost and are forcing sponsor banks as well as fintechs to build partnerships that are clearer and more stable from the outset.
Rabab Ahsan | August 27, 2024
Business of Fintech, Future of Investing

Hotspots for investor support: What fintech CEOs are eyeing in the latter half of the year

  • Fintech CEOs are generally optimistic for the year's second half.
  • Logan Allin, founder and managing partner at Fin Capital, outlined fintech CEOs' key objectives and strategies to mitigate the effects of high interest rates on funding and valuations.
Sara Khairi | August 06, 2024
Business of Fintech, Finance Everywhere

As their popularity grows, more banks are eyeing gift cards as a loyalty perk

  • Consumer interest in gift cards remains high, with 56% planning to purchase them for major life events and 38% preferring them as Christmas gifts over physical items.
  • Given consumer interest, multiple FIs and fintechs are partnering with technology providers to offer gift cards and drive consumer loyalty and engagement.
Rabab Ahsan | March 28, 2024
Business of Fintech, Payments

Stripe hits the golden $1 trillion payment volume benchmark

  • It seems like $1 trillion is the new hot number. Recently Zelle said that it is on track to reach the $1 trillion payment volume mark this year, and now Stripe says that it too has crossed the payment volume benchmark.
  • Stripe's annual letter shows that the company had a good year, from its payment volume rising by 25% to its success with startups through its Atlas product.
Rabab Ahsan | March 21, 2024
More Articles