Northwest Arkansas Democrat-Gazette
Goldman Sachs’ consumer banking
Goldman Sachs’ consumer banking division will celebrate its fifth year next month. Under the name ‘Marcus,’ it’s the investment bank’s first foray into consumer banking in its 147-year history.
Goldman offers unsecured personal loans, online savings accounts and certificates of deposit. Apple chose Marcus to underwrite its new credit card, and Goldman is expected to launch online money and investing products as well.
Omer Ismail, head of U.S. consumer business at Goldman, worked in the bank’s private equity division before joining Marcus as its first employee.
Why did Goldman decide to start a consumer banking division?
You can divide the history of the consumer bank in two phases: from the financial crisis to 2014 and from 2014 to today. We became a bank holding company in late 2008. Those first few years were about getting the regulatory compliance infrastructure installed to be a bank. We were thinking about the bank as purely a legal entity. After 2014, we started looking at the bank as an asset for growth. And it was there that we looked at opportunities where we felt there were unmet consumer needs.
Why did you start with personal loans, instead of a more traditional checking account?
We looked at consumer pain points and areas we could have a competitive advantage. We were interested in places with deep profit pools, so that our success was not predicated on getting some unreasonable market share. The U.S. consumer financial services market is massive. There’s a trillion dollars in credit card debt, and $4 trillion in deposits in low-earning savings accounts.
Nobody wants to go in a bank branch and apply for a personal loan. We could do this all online, and a personal loan as a product is simple to handle and is less intensive compared to a checking account. That was one criterion for us as we were looking to enter the business.
Goldman Sachs had zero history in consumer banking. What drew you to start this division?
It was a unique opportunity, both for Goldman Sachs and for me personally. How often does Goldman Sachs create a whole new business? Consumer financial services is also an area where you know you can do it better than the competition, and you are really making a difference in the lives of real people. For example, I was listening in on our customer calls when there were floods down in Houston. For those customers who had personal loans, we offered them a deferment plan. It gave them one less thing to worry about, and they were very grateful.
The final thing that I will say is that you know I really feel like Goldman Sachs pays me to learn. I get to sit in meetings where we try to solve real customer pain points and listen to the best in the world talk about their craft. It’s been great, on a personal level, but it’s been a great learning experience for me.