Goldman Sachs launches personal loan service for small customers
15 October 2016
After 150 years as an investment and merchant banker, Goldman Sachs has launched a new online personal loan service to enable ordinary borrowers.
Named Marcus after one of the firm's founders, Marcus Goldman, the sertvice is aimed at those who want to pay off their credit card debt.
The company feels an ordinary-named service would attract small borrowers who are put off by big-name banks.
Consumers can take an unsecured no-fee, no-frills loan up to $30,000 for two to six years, at fixed interest rates ranging from 6 per cent to 23 per cent depending on borrowers' credit score, credit history, and the tenure.
Moreover, customers are free to set their own repayment date and loan tenures.
According to Bloomberg, initially, applications will be limited to people who get a code from Goldman in the mail. Goldman said this week that it would send the code to millions of people. The company is focusing on customers with a credit score above 660, so-called prime credit.
According to commentators, in rolling out Marcus, Goldman was also taking a page from Google by selectively hand-picking its first users. People who had not received a code in the mail from the bank, cannot be among those who can initially apply for its loans.
The launch of Marcus comes after Goldman Sachs entered consumer banking by opening an online bank that allowed anyone with $1 to open an account, as a against Goldman's $10 million minimum for a private wealth management account.
According to CNBC, the lending business is not the company's only foray into Main Street banking. It previously bought GE Capital's online consumer banking business, acquiring some 150,000 accounts and later relaunching and rebranding it as part of GS Bank in April.
According to commentators, Goldman's common-man initiative might have something to do with the fact that nimbler ''fintech'' startups had shown that catering to average US citizen could be a big business.
''We at the firm feel that there is a confluence of a few things which has made us decide to get into this business,'' said Harit Talwar, the head of the Marcus project, in a Goldman podcast earlier this year.
''One is that digital technology is making large brick-and-mortar branches questionable. You don't need necessarily brick-and-mortar branch networks to get into consumer financial services or consumer lending.''
The move had been anticipated after Goldman hired an executive from credit card company Discover to lead the new consumer lending business, last spring. Since then, Goldman had been picking talent from the online lending company Lending Club and hiring a former Consumer Financial Protection Bureau official to make sure it stayed on the right side with regulators.
Marcus would, for starters, offer loans to consumers wanting to pay off their credit card debt.