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 Marcus was built inside Goldman Sachs from scratch; no branches, no outdated technology systems, no baggage.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.

Fake apologies, anti-artists, and elitist messaging: The year in financial services marketing fails

It seems like a cliché when a financial firm finds itself in PR trouble these days, but it still happens pretty regularly.

You would think that large money institutions would have learned their lessons by now from past snafus. They don’t. 2016 saw some rather prolific fails when it came to financial brands being off message from what their shareholders and customers expect.

Here are a few of the largest gaffes made by incumbent financial companies during 2016:

Wells Fargo, you had me at eight (accounts)

Cross-selling products is nothing new in banking. That’s bread and butter to the business model. But when it goes public that Wells Fargo employees were fabricating account and credit card openings just to hit their high-pressure quotas of eight accounts (why, because it rhymes with “great”!), well, then you’ve firmly placed the bank opposite its customers.

Ex Wells Fargo CEO, John Stumpf

When the reigning Wells Fargo CEO John Stumpf appeared in Congress to address the problem, there were a lot of other things he could have said. Instead, appearing with a cast on his arm and a recent recipient of major stock grants, he totally whiffed, making him and Wells look completely out of touch and tone deaf.

Things just got worse when Wells took out a full page ad to not apologize in the wake of the scandal.

Wells Fargo: Down with the arts!

Wells Fargo couldn’t catch a break this year. In September, the bank ran a series of print ads promoting education in the sciences. Wells was pushing something it called “teen financial education day”, and the ads featured an image of a smiling young woman with the headline: “A ballerina yesterday. An engineer today.”

Popular artists took to social media to complain that the firm was denigrating artists. This prompted the bank to issue another apology, saying it was committed to support of the arts.

Goldman Sachs, bank of the elite, now markets to the masses

Who would have thought that Goldman Sachs, a firm that traditionally serviced the mega wealthy, would roll out a consumer bank for the masses? That’s exactly what it did in 2016 when it launched Marcus, its new consumer offering.

While GS definitely wants your money and was ready to tell you why, the online experience wasn’t quite ready for prime time. Early adopters like the WSJ’s John Carney complained that the web experience was buggy, the website not easy to use, and the sign-up process clunky.

Fintech has fails, too

When big financial services firms fail with their marketing and branding, it creates opportunities for upstart fintech brands to try and get it right with customers. SoFi, an online lender, has found a lot of success with millennials looking to refinance student debt. But its first Super Bowl ad ended up striking a wrong chord.

The video ad shows a lot of young, fit, diverse 20-somethings running, walking, biking, and jogging in a city that looks like San Francisco, where the firm is based. The ad divides the world into “great” and “not great” people. The message is that SoFi only works with “great people”.

Beyond the Silicon Valley elitism in this message, the Super Bowl probably wasn’t the right audience.

“The Super Bowl is one of the great equalizers in American life: everybody watches the same game, and the same ads, at the same time, and has pretty much the same experience,” wrote Fusion’s Felix Salmon. “To use the Super Bowl to separate America’s “great” few, on the one hand, from its unwashed masses, on the other, is tone-deaf at best.”