Name: Insights: Goldman Sachs Breaks Into the Consumer Business
Uploaded: 2020-03-10
Duration: 4 min 32 s
Description: The storied investing institution has launched a consumer product that challenges conventional consumer banks. (June 2019)

[MUSIC PLAYING] SPEAKER 1: Goldman Sachs has never been in the consumer business in its entire 100 something year history. SPEAKER 2: 150 years. SPEAKER 1: 150. And now, you've only recently decided to do it. What is Marcus? SPEAKER 2: So Marcus is Goldman's global consumer business. Our purpose is to disrupt the distribution and consumption of financial services. Pretty much what Amazon has done and is doing to retail or what Apple did to the music industry. We believe we can do that, and we are early days. This is our third year. We have four million customers. We have close to $50 billion in deposits. In fact, we should be hitting $50 billion in the next few hours. OK. Or maybe by tomorrow. We've announced, as you said, a core brand with Apple. We purchase clarity money, which is a series of very forward leaning personal financial management tools to be the consumer's advocate, which we are planning to rebrand into Marcus over the next few quarters. SPEAKER 1: You have no branches, so which makes you a challenger bank, which is the expression we've been using this morning. So fascinating. Goldman Sachs is a challenger bank. And banks typically have many, many products. Wells Fargo used to brag about how many different products it would cross sell you. And until you launch with Apple, you have one product. Tell everybody what it is and why just one. SPEAKER 2: Well, we have more than one product. We have personal loans between where we give unsecured personal loan from $3,500 to $40,000. We have savings accounts and CDs. We have a series of money management tools what we call the personal financial management tools. And now, we have the credit card. But the important thing is-- so when we look at the consumer financial services business, we have very, very, very focused on making life easy for the consumer and building a business, which is attractive for the shareholder. What consumers want is simple, transparent, not complex. That's what they get from the banking industry as a whole. And when they see complexity, they lose trust. 70% plus of millennials would rather visit the dentist than the bank branch. And that's a pretty low bar. OK. And it's actually sad that those are the 60% of the consumers in America don't trust a bank or credit card company. SPEAKER 1: Talk about the fees that you charge customers and why the Goldman Sachs balance sheet is part of your answer to that question. SPEAKER 2: So the fee we charge to the consumers is a big number called zero. So for example, in our loan's business, no prepayment fee, no origination fee, no late fee. In our card that we've announced as Apple made the announcement in the features, which are there on the site, no fees. In deposits savings accounts, no fees. The reason is we are a balance sheet player, as you said. We earn-- in fact, some customers were so incredulous when we launched loans that there are no fees. We have a section on the site saying how do we make money. SPEAKER 1: How do you make money? SPEAKER 2: We make money on net interest margins. And that-- SPEAKER 1: That's extremely old fashioned, isn't it? SPEAKER 2: It is extremely consumer friendly. And the reason we can do that as you rightly said is we have a unique structural competitive advantage. We are in a category of one. We are the only large bank which doesn't have a legacy consumer business, legacy technology, legacy branch network. We can start afresh, and unlike the fintechs, we have a balance sheet. We have a risk management DNA, and we have a brand. 

Insights: Goldman Sachs Breaks Into the Consumer Business

Uncategorized

The investing institution has launched a consumer product.

Goldman Sachs Breaks Into the Consumer Business

The storied investing institution has launched a consumer product that challenges conventional consumer banks. (June 2019)