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Is Goldman Sachs redefining how online loans work?

16th November 2017

The CEO of Goldman Sachs, Lloyd Blankfein, is something of a Wall St Veteran and legend in the American banking industry. You wouldn’t expect him to be making personal calls to customers approaching the bank and asking for a small loan to buy a car or take a holiday.

Yet, this is exactly what Blankfein has been doing because of ‘Marcus’, the new online-only loan service from Goldman Sachs. Most customers of the new Marcus service will only ever interact with the online system or a contact centre agent, but the fact that the CEO has been so hands-on with the product – genuinely calling random customers and asking them how they liked the service – shows how important this company thinks the online-only loan sector can be for them.

Goldman Sachs predicts that by offering customers an online-only loan option that offers an easy to use interface – easy to apply and easy to get a decision and payment – they can generate an additional $1bn in revenue in just three years. This is just from small consumer loans of $3,500 to $30,000.

Consumer loans is a different focus for Goldman Sachs, but there is a solid customer-focused strategy behind their decision to launch Marcus. They have taken a typical Fintech (financial technologies) approach by building the service entirely around the customer – making the service as slick and easy to use as possible. So there are no branches and no legacy systems – Marcus is effectively a startup that is bankrolled by a Wall St giant.

And there is one huge benefit. The problem for new lending clubs and other Fintechs is that they need to spend heavily on marketing and branding just to become recognised and trusted. With Marcus being backed up by one of the most recognisable brands on Wall St, they have already leaped the hurdle of how to be trusted by customers. Marcus is on track to lend over $2bn in small loans this year.

If Marcus makes a serious charge into the online banking space dominated by Fintechs then it could indicate the future for many other banks. Perhaps they cannot just take their existing processes and put them on a website. Launching a new brand that is completely redesigned around how loans can operate in the Fintech environment might be what many more established banks consider doing. Marcus might be the future for loans.

Do you think Marcus can be the future of loans? Let me know your thoughts by leaving a comment here, or get in touch on LinkedIn.

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David Turner
Article by: David Turner

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