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Insiders say Goldman Sachs Group Inc. is eyeing the possibility of buying Clarity Money, a personal finance startup. Those unidentified sources said Goldman Sachs intends to mesh it with Marcus, its online personal loan lender.
Although a deal hasn’t been reached yet, any agreement would only be finalized pending regulatory approval.
Goldman Sachs is Beefing Up Its Personal Loan Efforts
In recent news, Goldman Sachs has been making headway into the personal loan market. Its Marcus online lender started doling out online personal loans in 2016. It allows borrowers to take out as much as $40,000 with an interest rate from 6.99 percent to 23.99 percent.
To date, it has originated in excess of $2 billion, and fresh off that success, Goldman Sachs is looking for a way to widen that scope. This success comes at a time when other lenders struggled through 2017.
Goldman Sachs has made other efforts to up their game in the personal finance sector. It has already bought Final, a California-based credit card startup. That company provides customized card numbers that are designed to help fight fraud.
In addition, Goldman Sachs has teamed up with Intuit Inc. That company makes tax-management and financial software, which helps Goldman Sachs in its pursuit of providing loans to potential borrowers.
What is Clarity?
Adam Dell founded the Clarity App. Clarity employs artificial intelligence to help people with their finances. It can help lower bills, seek out a more desirable credit card, or set up an account, among other things.
Based in New York, in March 2017, Clarity was able to raise about $11 million in funds. Some of the investors who have supported Clarity have also lent their past support to well-known companies such as Google and LinkedIn.
Although it has only been in operation for just over a year, Clarity has over 500,000 users.
Goldman Sachs’ Future Plans
Goldman Sachs Co-President Harvey Schwartz laid out a plan for the company’s interest in upping its loan offerings last year. In the next three years, the plan calls for lending to make up a minimum of 40 percent of its expected $5 billion growth in revenue.
Why Enter the Personal Loan Market?
The personal loan market can be a tremendous risk for companies. While the risk is big, so is the potential reward.
People are looking for cheaper solutions than charging items on their credit cards. And if they don’t want to or can’t use their home equity for a loan, personal loans become an attractive option.
More consumers are starting to realize the value of installment debt as opposed to revolving credit. Personal loans can be an especially attractive option for borrowers who have a good to excellent credit rating; they’re more likely to receive lower interest rates on their personal loans.
Author: Mike Brown
In his role at LendEDU, Mike uses data, usually from surveys and publicly-available resources, to identify emerging personal finance trends and tell unique stories. Mike’s work, featured in major outlets like The Wall Street Journal and The Washington Post, provides consumers with a personal finance measuring stick and can help them make informed finance decisions.