With a new online personal loan program called “Marcus” and plans to earn a billion or so in new revenue as a consumer lender, Goldman Sachs is chasing traditional banking business by offering individual personal loans to retail customers. Who is the voice of “Marcus” on the line to promote the revamped personal lending products? It’s none other than Lloyd Blankfein himself, offering a customized Goldman personal loan for $3,500 to $30,000 for personal borrowers.
While he spends most of his time on mega-deals and sophisticated trading schemes for his employer and its clients, he recently took the time to record some unique marketing calls in light of a new objective by Goldman.
Goldman Sachs has a new focus on personal loans and lending to qualified individuals. After the financial crisis in 2008, Goldman changed its structure to become a bank holding company in response to stricter financial regulations when federal banking authorities preferred the large banks to focus on traditional banking business: deposits and loans.
Through Marcus Personal loans and other individual loan portfolio growth, Goldman hopes to hit the $2 billion mark within its personal loan book before year-end. Investments in their call center and marketing campaigns with Vevo and American Express will bolster their customer base for now; however, the threat of disruptive fintech startups is an ongoing challenge for Goldman to manage.
Despite rapid growth in fintech startups offering personal loans, Goldman has distinct advantages in the American personal lending market. Upstart technology firms such as Prosper, LendingClub, Avant, and Sofi failed to grow their personal loan portfolio as fast as Goldman this year. The giant of Wall Street maintains an extremely low cost of capital compared to a typical fintech operation. There is no need to invest in a nationwide branch network of physical locations, and Goldman can already deliver its banking services through the web and mobile apps, sharing an advantage with newer online lenders over the traditional banks.
Is This Good for the Average Joe?
Goldman’s recent push into the personal loans business is likely to be good for the average American borrower. Their call center promises to answer “more than 95% of calls” within a 30-second window, far sooner than a typical wait for retail banking customers. Marcus personal loans come with no fees and a simple fixed-rate structure. According to the “Marcus” website, Goldman’s personal loans have term lengths from three to six years, carrying interest rates from 7 percent to 24 percent (APR).
It remains to be seen whether the major retail banks respond in kind to the Goldman push for consumer lending growth. Ideally, the new competition in personal lending business will help borrowers find better service and more affordable rates. Fintech lenders, Goldman, and the traditional banking institutions all see dollar signs in online lending, but easy access to credit for cash-strapped consumers can spell trouble for taxpayers and the American economy in the long run. According to Goldman, “only the most creditworthy applicants qualify for the lowest rates and longest loan terms.”
Author: Andrew Rombach
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