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This Is Uncomfortable

Goldman Sachs offers new online lending platform

Mark Garrison Mar 20, 2017
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Goldman Sachs' new lending platform, Marcus, makes small loans to regular people, not elite corporations and investors.
Spencer Platt/Getty Images

As one of the world’s most elite banks, Goldman Sachs is known for serving billionaire clients, giant companies hungry for deals and hot startups eager to go public. It is not the type of place folks think of when they need a little money to spruce up their kitchen or take care of unexpected medical bills. Yet that is exactly what the bank is doing with its new offering called Marcus, an online platform that makes small loans.

The new venture is light years away from Goldman’s comfort zone in several ways. For one, it’s serving regular people, not elite corporations and investors. Also, it’s an attempt to build a tech startup inside a bank that started up in the 19th century. (The online lending service is named after founder Marcus Goldman.) Taking on this unusual task requires the firm to hire and operate in a very different way than it has in its long history.

That difference was evident on a recent tour of the Marcus workspace. The team uses the same elevators as other Goldman employees in the firm’s lower Manhattan tower, but they don’t seem to shop at the same stores as their colleagues in the traditional investment banking businesses.

“Some are wearing jeans and some are wearing slacks. I don’t think we have people in suits,” observed Harit Talwar, Goldman’s head of digital finance. 

The casual dress is atypical and so are the backgrounds of many of the employees. Most have financial experience, but a third come from everywhere but banking, including prized hires stolen from Google and Facebook. That’s important at a time when investment banks worry about losing top talent to flashy technology companies.

Marcus is a test of whether a legacy bank can compete with startups in building the next generation of finance, a challenge closely watched by others in the business.

“It’s one of the highest-profile experiments we’ve seen in the banking industry,” said Morningstar bank analyst Jim Sinegal. “Most of the other banks have not made moves on this scale.”

Marcus shares some characteristics with online lenders like Lending Club and Prosper. But there are several important differences. Key is that loans from Marcus are backed up by a giant bank with a formidable balance sheet, not some upstart technology company.

Marcus is a bold bet. Losing it could mean getting left behind by younger competitors in a space that could transform the very core of finance. The hope for Goldman is that it can find success through an unlikely combination of a digital startup mentality with the structure of a massive legacy bank.

“We have the duality of being new, with a 147 year history,” Talwar explained. “This is a 147-year-old startup.”

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