How a Goldman Sachs brand is trying to erase debt stigma

For most people, Goldman Sachs conjures up images of money, power and scary cephalopods. But the investment bank is getting into consumer lending now, which means it's going to have to make its brand a little more relatable to the masses. In October, it launched Marcus, an online lending startup dedicated to helping people own their debt issues with a personal loan product and a new message: "Debt happens. It’s how you get out that counts."

"There's a stigma around debt, people don't like to talk about it," Nicole Sbarra, a product manager for Marcus, said at an event in New York Thursday night. "It makes them very uncomfortable. And most people also don't think of credit card debt as actual debt, they see it as a balance... [Marcus] is going to help you understand that there’s more to you than this extreme amount of debt on your shoulders."

While it's a shift away from the image Goldman has built over decades, Marcus by Goldman Sachs is its own brand, which is as much to avoid alienating long time Goldman clients as it is to give confidence to Marcus customers. Marcus was built inside Goldman Sachs from scratch; no branches, no outdated technology systems, no baggage. Marcus was co-created with thousands of consumers that helped designers to find out how they can best tackle the problem of getting out of debt. Marcus loans come without fees and lower rates than those of many credit cards, making it well positioned to compete with consumer banking products and online lending startups like Prosper. Keeping the brand separate, as much as possible, from Goldman is necessary, in some ways, considering the bank's history. From 2005 to 2007, Goldman issued and underwrote mortgages and securities backed by residential loans that were borrowed by consumers with poor credit. This led to the housing bubble burst and economic recession. Last year Goldman paid out $5.1 billion for its role in the financial crisis. A key point the Marcus team found through research sessions was that when dealing with their finances -- and particularly sensitive subjects like debt -- they want to work with "a trusted, secure, extremely well-established brand," Sbarra said. "Marcus is a brand new brand, but Goldman Sachs has been around for a long time," Sbarra said. "People like to think about banking with Goldman Sachs, but we think of ourselves as a startup within Goldman." Money is one of the most personal and sensitive topics for people, even people with lots of it, which is why empathy plays such an important role in building a financial product. The average American carries some $16,000 in credit card debt and about 70 percent of them don't know there are alternative options to that credit card debt, said Michael Cerda, head of product. “The team spoke with some 10,000 customers and learned about this stigma, learned about how to consult about it, learned about how anxious people got about it," Cerda said. "It’s everything from that emotional level to the detailed level of all these fees, all these rates, the jargon and the terminology. What the team did was really take a great swing at making it very simple to understand.” For example, they learned that "origination fees" are widely misunderstood among the general population, so Marcus calls it a "sign-up fee" on the site -- as in, "No sign-up fees. Since that's not a very warm welcome." Consumers said other players in the space put credit scores and APRs front and center, so Marcus asks how much users want to borrow and how much they can afford to pay on a monthly basis. “People don't think about when they want to be out of debt by, they think about what they can afford to pay every month,” Sbarra said.