Corporate Finance

Goldman Sachs Rolls Out Consumer Lending Platform

Introduced last week, the online-only platform, Marcus, allows consumers to borrow up to $30,000 with no fees and a fixed APR.
Sean AlloccaOctober 18, 2016
Goldman Sachs Rolls Out Consumer Lending Platform

Almost 150 years after Marcus Goldman opened a small banking business in Manhattan, Goldman Sachs introduced an online-only platform last Thursday that offers unsecured personal loans to consumers mired in credit card debt.

Borrowers can visit the website for Marcus by Goldman Sachs and apply for loans of up to $30,000. The loans have no fees and offer fixed interest rates from 5.99% to 22.99%, depending on credit scores and factors. Loan terms last two to six years.

“For many who manage debt payments on high-interest rate credit cards, a straight-forward personal loan is a better solution,” said Goldman Sachs partner Harit Talwar.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

The venture represents an important shift toward retail banking by the prominent Wall Street investment bank. According to Fitch Ratings, the launch of Goldman’s new online consumer lending platform is part of the firm’s efforts to capitalize on the growing financial technology (fintech) sector while maximizing the benefits of becoming a bank holding company.

Fitch says Marcus will be a “formidable competitor” to existing players because it is funded by consumer deposits and has “the benefit of the technological support and the financial resources of a global financial institution.” Still, Fitch believes that “the consumer installment lending activity will initially have a limited impact on Goldman’s financial performance.”

To launch the product, Goldman surveyed 10,000 people through interviews and in-depth consumer research. They found borrowers are frustrated with hidden fees, unexpected changes in interest rates, limited payment options, and the inability to talk to live operators.

“Marcus offers an option for consumers who are searching for a simpler alternative to credit card borrowing, where rates can change and multiple fees can be charged,” Talwar said.

Marcus promises no fees for late payments and fixed rates for the entire term of the loan. Borrowers can tailor their payment dates, and speak to actual human representatives, according to a company release.

However, more interest will be accumulated for missed, partial, or late payments, resulting in a larger final payment. “Truly, we make money on interest, not on fees,” according to the site.

The company said customers could expect potential savings of 300 to 500 basis points compared with other loan offerings.

For now, Marcus is only available to prequalified borrowers who receive a code from Goldman in the mail. The company said millions of codes will be sent out. Customer feedback from the initial phase will help Goldman refine the platform.

Marcus will be available to a broader audience in the coming months, Goldman says.