Goldman Sachs to concentrate on consumer banking arm Marcus for growth

The COVID-19 pandemic has forced the bank to look towards digital banking as the path to future growth.



Goldman Sachs Group Inc. is firming up plans to bolster its consumer banking arm Marcus through acquisitions and concentrating on digital banking.

Last year, the bank planned to gather $125 billion in consumer deposits with a goal of $700 million in pretax income from the business. But, the coronavirus’s arrival slowed all plans.

The management has set its M&A department on to the task of coming up with potential deals though Goldman has put an “extremely high” bar for any future deal, considering its recent troubles.

Goldman Sachs

Goldman Sachs World Headquarters

The pandemic has forced the bank to look towards digital banking as the path to future growth and lessen the reliance on opening more branches for revenue growth.

The bank’s chief executive officer David Solomon wants to go back to the traditional consumer banking and wealth management method rather than rely on volatile trading and investment banking. Albeit the old hat will be dawning a new digital hat—that is full digital technology will be utilized to reach the consumers.

“Digital businesses that bring in new customers or unique technologies would be attractive to the bank,” a source said.

There are reports that Goldman Sachs is considering offering checking accounts for Main Street consumers in partnership with the digital-payments company Marqeta.

Marqeta Chief Executive Officer Jason Gardner said in a statement on Thursday that Goldman plans to use the firm’s technology to issue debit cards into mobile wallets, and provide real-time access to spending data.

“You can instantly issue those cards into Apple Pay or Google Pay and it instantly gives consumers access to their funds,” he said in an interview.

In January 2020 two new financial plans with two -and five-year goals were set out for Marcus.

A booming investment banking and trading business during the pandemic and cost cuts made due to remote working have helped Goldman make significant progress on its profitability and cost-cutting goals, said sources to Reuters.

However, loan and deposit growth have been slowed at Marcus due to the pandemic fearing servicing capacity of businesses and individuals.

Goldman is set to declare its fourth-quarter results on Tuesday and analysts believe that the bank will cite slow business growth in its consumer loan business, which includes Marcus and a joint card venture with Apple Inc.

The bank’s earlier target was to grow the consumer loan business from $7 billion in January 2020, to over $20 billion over five years. Now it could take longer to achieve if the economic slowdown persists, the sources said.

But it is expected to reach its target of achieving $125 billion in deposits over the same period as the bank hopes the market conditions will improve once the vaccines start taking effect and consumer sentiments return.

The bank’s total deposits were $96 billion at the end of the third quarter.

Regulatory restrictions in the United Kingdom and a rate cut on U.S. savings accounts slowed growth dramatically in the second half of 2020, the sources said. The bank added just $4 billion of deposits in the third quarter after adding $32 billion during the first half, reports Reuters.

Goldman had suffered a huge blow after it had to settle a probe over Malaysia’s sovereign wealth fund 1MDB last year.

Subscribe to the nation’s fastest-growing business magazine to get the latest business news delivered to your inbox. 

Avatar
Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Accor reports $2.5 billion loss, hopeful of a recovery by next year

Accor reports $2.5 billion loss, hopeful of a recovery by next year

Accor, Europe’s largest hotel chain, reported a $2.5 billion net loss in 2020 due to the deterioration in the industry linked to the sprea...
10 hours ago
Is the sun shining again on AMC stock?

Is the sun shining again on AMC stock?

As the old adage goes, good things come to those who wait. This might come true for movie theatre operator AMC Entertainment Holdings Inc. w...
12 hours ago
HSBC turns to Asia for future growth

HSBC turns to Asia for future growth

The bank’s maximum pre-tax benefits (90%) come from its Asian business. Chairman Mark Tucker and chief executive Noel Quinn are strugg...
1 day ago
Wells Fargo to forego asset management unit to private equity for $2.1 billion

Wells Fargo to forego asset management unit to private equity for $2.1 billion

Wells Fargo has been underperforming for the past few years and has undertaken cost-cutting and restructuring to improve its numbers. Wells ...
1 day ago
Lucid Motors partners with Churchill Capital IV to go public in SPAC mega deal

Lucid Motors partners with Churchill Capital IV to go public in SPAC mega deal

Lucid Motors, the luxury electric vehicle makers, will go public with a blank-check firm Churchill Capital IV Corp in a $24 billion deal, th...
1 day ago
Aviva hives off French unit to Aéma Groupe for $3.9 billion

Aviva hives off French unit to Aéma Groupe for $3.9 billion

UK’s leading insurer Aviva Plc has sold its French unit for 3.2 billion euros ($3.9 billion), marking the biggest deal under chief executi...
3 days ago