Gold­man Ac­quires Mo­bile Sto­re­front

L'Opinion - - The Wallstreet Journal - Liz Hoff­man and Pe­ter Ru­de­geair.

As part of its push in­to re­tail ban­king, Gold­man Sachs bought per­so­nal-fi­nance app Cla­ri­ty Mo­ney. The app is ex­pec­ted to serve as the smart­phone sto­re­front for Gold­man’s gro­wing suite of re­tail pro­ducts.

Gold­man Sachs Group Inc. bought per­so­nal- fi­nance app Cla­ri­ty Mo­ney, ac­qui­ring a mo­bile sto­re­front for its gro­wing consu­mer bank.

The deal clo­sed on Fri­day for Cla­ri­ty Mo­ney, whose ba­ckers in­clude So­ros Ca­pi­tal and Ci­ti­group Inc.’s ven­ture- ca­pi­tal arm. Adam Dell – bro­ther of Mi­chael Dell, the per­so­nal­com­pu­ter pio­neer – foun­ded Cla­ri­ty Mo­ney and will join Gold­man as a part­ner, a title ra­re­ly gi­ven to out­si­ders.

The Wall Street firm has been in­ten­si­fying its push in­to re­tail ban­king, a de­cade af­ter its conver­sion from a bro­ker- dea­ler in­to a bank that can take consu­mer de­po­sits. Un­der the brand name Mar­cus, Gold­man be­gan ma­king per­so­nal loans on­line in 2016 and has ori­gi­na­ted more than $ 2.5 bil­lion so far. It al­so of­fers high- in­ter­est sa­vings ac­counts and has about 350,000 cus­to­mers across both pro­ducts.

As pre­vious­ly re­por­ted, Gold­man is paying a high eight- fi­gure sum for Cla­ri­ty Mo­ney – a rich va­lua­tion for a two- year- old star­tup that has yet to turn a pro­fit.

But Cla­ri­ty Mo­ney’s rough­ly one mil­lion users will qua­druple Gold­man’s cus­to­mer base. In ad­di­tion to Mr. Dell, about two do­zen other Cla­ri­ty Mo­ney em­ployees will join the bank.

La­cking a branch net­work, Gold­man has part­ne­red with tax- pre­pa­ra­tion soft­ware firm In­tuit Inc. and Fi­de­li­ty and has sent hun­dreds of mil­lions of pieces of di­rect mail in an ef­fort to draw cus­to­mers.

Cla­ri­ty Mo­ney’s app is ex­pec­ted to serve as the smart­phone sto­re­front for Gold­man’s gro­wing suite of re­tail pro­ducts, which the Jour­nal has re­por­ted could in­clude wealth- ma­na­ge­ment tools, home mort­gages, point- of­sale loans and in­su­rance po­li­cies. Mar­cus doesn’t yet have a mo­bile app.

Cla­ri­ty Mo­ney uses al­go­rithms and ar­ti­fi­cial in­tel­li­gence to help consu­mers can­cel or lo­wer their bills, find a bet­ter cre­dit card, and set sa­vings goals. It ag­gre­gates in­for­ma­tion about their bank ac­counts and spen­ding ha­bits, and col­lects fees for re­fer­ring them to cre­dit- card and other fi­nan­cial com­pa­nies.

“Consu­mers are too of­ten overw­hel­med by or don’t have a good handle on their fi­nances,” Omer Is­mail, chief ope­ra­ting of­fi­cer of Gold­man’s Mar­cus said in an in­ter­view. “We think we can sim­pli­fy that.”

Still, Gold­man will have to strike a ba­lance bet­ween kee­ping Cla­ri­ty Mo­ney as a neu­tral plat­form – re­com­men­ding the pro­ducts best- sui­ted for its users, even if they come from a Gold­man com­pe­ti­tor – and using it to push its own of­fe­rings.

That chal­lenge will on­ly grow as Mar­cus does. Mr. Is­mail said last week Gold­man might look to launch its own cre­dit card, which could prove awk­ward as Cla­ri­ty Mo­ney cur­rent­ly re­com­mends ri­val cards from JPMor­gan Chase & Co., Ci­ti­group Inc. and Ame­ri­can Ex­press Inc.

Other per­so­nal- fi­nance apps have fai­led to catch on, es­pe­cial­ly when hou­sed in­side len­ders. Ca­pi­tal One Fi­nan­cial Corp. bought bud­ge­ting app Le­vel Mo­ney Inc. in 2015 but shut it down 18 months la­ter. On­line len­der Pros­per Mar­ket­lace Inc. killed off Bill­guard Inc. in 2017 af­ter buying it for $30 mil­lion two years ear­lier.

What’s more, per­so­nal­fi­nance apps can be a tough sell be­cause their prompts nag or stress out users, said Sch­wark Sa­tya­vo­lu, who foun­ded per­so­nal- fi­nance tra­cker Yo­dlee Inc. “You don’t want that thing pin­ging you eve­ry time you go in­to a Star­bucks saying, ‘Hey, don’t drink a cof­fee to­day be­cause you can’t af­ford it,” said Mr. Sa­tya­vo­lu, now a ge­ne­ral part­ner at ven­ture- ca­pi­tal firm Tri­ni­ty Ven­tures.

Gold­man’s deal for Cla­ri­ty Mo­ney be­gan with a sales call from Mr. Dell, who is the beau of su­per­mo­del and “Top Chef” host Pad­ma Laksh­mi. Mr. Dell last spring pit­ched Gold­man exe­cu­tives on of­fe­ring Mar­cus loans and sa­vings ac­counts through the app. Mr. Is­mail had a dif­ferent idea: “Would you be willing to sell?” he as­ked.

Gold­man had been wor­king on a per­so­nal- fi­nance and bud­ge­ting app of its own, in­ter­nal­ly dub­bed FiDi, af­ter Fi­nan­cial Dis­trict, the lo­wer Man­hat­tan neigh­bo­rhood. Buying Cla­ri­ty Mo­ney would be fas­ter, and Gold­man li­ked the app’s jar­gon- free style and user prompts, Mr. Is­mail said.

“Any­thing you’d like to can­cel?” it asks, sho­wing re­cur­ring pay­ments like Net­flix Inc. sub­scrip­tions and gym mem­ber­ships. Gold­man CEO Lloyd Blank­fein jo­ked du­ring a de­mons­tra­tion that it could help him can­cel his cable bill, Mr. Is­mail said.


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