The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.
Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.
“Much like in the US, we’re aiming to offer consumers easy-to-use and higher-returning savings options than [they] might have elsewhere,” said Mr Scherr.
Over time, he added, the bank could look to add a consumer-lending arm in the UK, taking on the likes of Zopa, RateSetter and Funding Circle.
In its first six to eight months of operation Marcus originated about $1bn of loans, and Goldman chief Lloyd Blankfein has given orders to generate another $1bn by the end of this year, according to Harit Talwar, head of Goldman’s online lending and deposit businesses, who joined the bank as a partner in May 2015.
The deeper push into retail banking comes as some of Goldman’s traditional business lines are struggling, crimped by new rules on risk-taking. The core debt-trading unit, for example, has had two lacklustre quarters in a row, while the equity business has been seen as relatively slow to adapt to the rise of quantitative, computer-driven trading.
Late in July Goldman’s market capitalisation slipped below that of Morgan Stanley, its closest rival, for the first time in more than a decade.
Goldman’s key hire so far in the UK is Des McDaid, a former Lloyds TSB director who joined the bank in London as a managing director in July. Mr Scherr said Goldman was looking to expand Mr McDaid’s group from about 15 to “upwards of 30 to 50,” including a call centre in the capital, by the middle of next year.
Mr Scherr stressed that the key attraction for Goldman was the stickiness of deposit funding, which is seen as less likely to vanish during times of market turmoil. Since the crisis regulators worldwide have been urging banks to bolster their balance sheets by diversifying their sources of funds.
A British-based financial services banker at a rival to Goldman said it was easier to organically grow a deposit book by offering a rate near the top of the savings product tables than by acquiring one. The banker added that UK retail lenders could now view Goldman as a rival and be deterred from using its investment banking services.
Analysts said the retail business could be a solid bet to boost profits. Mike Mayo, an analyst at Wells Fargo in New York, noted that loans made so far on the Marcus platform have returns-on-assets about four or five times higher than those of the overall group.
Mr Talwar told a Goldman-hosted event in New York last week that he was determined to attack the $1tn or so of revolving debt held on credit cards across the US. Goldman says it can offer consumers a better deal: lower rates, flexible terms, and no fees.
“Borrowing on a credit card is like eating mac and cheese — very satisfying, but best to do it in small doses,” Mr Talwar said. “We’d like to be more like an easy Greek yoghurt or a cashew bar.”
Additional reporting by Martin Arnold in London