Marcus, Goldman Sachs’s Consumer Lending Arm, Is Not Adding Credit Cards Products … Yet

Marcus, the consumer lending arm for Goldman Sachs, wants to become the one-stop shop for many of your financial matters, except for one: credit cards — at least for now.

“Our fundamental thinking on the credit card space is that there is a lot of innovation that is required. It is true that the industry has a lot of bad practices,” Harit Talwar, head of Marcus, said at the CB Insights Future of Fintech conference in New York last week. “We are not against credit cards as a product, but we are against how they run today.”

Right now, Marcus is heavily focused on launching a savings platform in the U.K. in the coming months, Talwar said. In the U.S., Marcus’s online savings account yields 1.8% interest. Talwar did not provide specific details about the U.K. platform but acknowledged there will be some differences based on specifics of that market. Last month, the Financial Times reported that Marcus will likely launch in Germany after the U.K. Talwar did not comment on this. He said that the U.K. product is set to launch sometime this year.

Aside from new geographies, Marcus is also trying to expand beyond its two core products, namely its fixed-rate, no-fee personal loan, and its online savings account. Earlier this year, it unveiled a home-improvement loan ranging between $3,500 to $40,000 for periods of three to six years. Prior to this, Marcus’s loans topped out at $30,000. Bank Innovation previously reported that this home improvement product is an indication that Marcus could be eyeing mortgage loans in the future. Personal financial management is also an area of interest for Marcus, as is evident from its purchase of PFM tool Clarity Money in April for an undisclosed amount.

But credit cards are not of immediate interest, though many smaller banks are currently looking to re-enter this market. This is because credit cards still rely on customers “not paying their bills on time,” to generate revenues, Talwar explained, and Marcus wants to be as customer-centric and customer serving as possible. “A car that drives 200 miles per hour, doesn’t encourage the customer to drive at that speed,” he said, unlike credit cards, which rely on the customer to overspend.

Clearly, Marcus wants to play it safe with its audience, especially since a large number of them are disenfranchised by the current banking systems. The advantage that Marcus has over its peers, when Goldman Sachs decided to launch it in 2016 is that “we were perhaps the only large bank without a retail bank, so we didn’t do things that consumers didn’t like,” he said. So keeping that in mind, it makes sense for Marcus to steer clear from the credit card industry for now. 

Wealth management and retirement products are also on the long-term roadmap for Marcus, Talwar said. “But right now, that’s not the focus,” he said.  Right now, Marcus is focused on market expansion and originating more loans.

So far, Marcus has already originated $3.5 billion in personal loans, Talwar said. It surpassed its $2 billion goal for December 2017 a month earlier. And because Marcus is an open architecture platform, with no branches it is able to scale at lower costs and as well as provide a higher basis point interest rate on its personal loans, which range between $3K-$40K. 

Launched in 2016, Marcus’s platform provides its users access to products either manufactured or distributed by Goldman Sachs. The latter aspect is one of the reasons it decided to purchase Clarity a few months ago.

“We view it as a digital storefront ,” Talwar said. “We liked the talent, simplicity of digital experience and their data architecture.” Through this purchase, Marcus gained a million more customers, and through Clarity’s platform, users can open an account or purchase financial products that don’t have to be Goldman Sachs products. 

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