Goldman Sachs Launches Personal Loan Service
Goldman Sachs, long known as one of the world’s top investment banks, is looking to expand from Wall Street to Main Street with the launch of Marcus, its new personal loans service. The bank has been looking for ways to reach new customers, experimenting with different services to help explore the retail banking market.
With Marcus, Goldman Sachs aims to provide consumers with a transparent, simple, and reliable alternative to help consolidate their debt and finance personal projects. New loans will have fixed rates, low APR, and flexible terms to add to loan customizability. Thanks to a strong team of industry veterans from different fields, Goldman Sachs hopes to disrupt a crowded lending field.
The bank will be competing with several established lenders including SoFi, Lending Club, and other smaller outfits designed specifically for personal loans. However, Goldman Sachs hopes its transparent offerings alongside years of financial expertise will help distinguish it from the rest of the pack.
A More Transparent Lender
Goldman Sachs’ new personal loan service, Marcus, is looking to charm customers with a simplified process, no hidden fees, and a transparent service designed to help borrowers consolidate debt easily. The large investment bank announced the personal loan service’s launch last week and introduced the team in charge of the project.
Led by Harit Talwar, formerly the head of credit-card company Discover Financial Services, Marcus’ team is comprised of veterans from banking, financial technology, and the high-tech industry. Team members include former employees from Google, Amazon, American Express, and PayPal. Thanks to this diverse pool of expertise, Goldman believes it can disrupt the crowded personal loans industry.
To deliver the goods, the Marcus team has created a loan service that offers several benefits to differentiate itself from other competitors. For one, Goldman Sachs plans to remove any hidden fees and origination charges for their loans. The bank will also offer fixed rates and lower APR than traditional credit card rates—12.99% for Marcus against 17.00% on average for credit cards.
As part of its services, Marcus will provide borrowers with unsecured loans in an amount up to $30,000 with fixed rates and no fees. Revenues will only be collected from interest payments instead of origination fees and prepayment penalties. Marcus will also have the advantage of using Goldman Sachs’ own funds to back the loans.
For many existing personal lenders, especially popular peer-to-peer solutions, funds can come from investors, making the loan qualification process slightly more challenging for borrowers in certain cases. Goldman seeks to eliminate this uncertainty by providing its own internally funded service instead of providing a hub for investors to meet borrowers.
Moving on Main Street
Long known as a go-to institution for sophisticated investors and large corporations, Goldman Sachs is looking to boost its retail banking division to reach a wider customer demographic. The bank started last year by offering online savings accounts and CDs to regular customers. With Marcus, Goldman Sachs is hoping to entice even more potential banking clients.
It will certainly not be easy, as other major banks such as Bank of America, JP Morgan, and US Bank already have a commanding lead when it comes to retail banking market share. However, Goldman is hoping that the Marcus initiative will set them apart by simplifying the lending process and reducing the bureaucratic red tape.
Initially, Goldman will limit borrower access to the new personal loans project. For now, only customers that have received a special code in the mail will have access to the service. Despite a narrow focus at the outset, the company is looking to quickly expand the service to reach a broader audience. With a strong team and years of expertise, Goldman could quickly become a serious contender in the personal loans market.
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