Why Marcus 'marriage and Goldman Sachs' investment management make sense

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When

Goldman Sachs
unveiled its personal loan and savings platform Marcus two years ago, this decision has been hailed as an investment bank push in a much less glamorous, even boring, financial area. Famous for its dominant position as a trading company and banker of the world's largest companies, Goldman relied heavily on Marcus as a cutting-edge digital banking application where ordinary people could find personal loans and interest rates. Attractive savings. Since then, Marcus has lent more than $ 4 billion to more than 2 million customers and has $ 29 billion in additional deposits.

Now comes a big twist. In a memo obtained by ForbesGoldman announces the merger of Marcus into its $ 1.5 trillion investment management business, creating a new consumer and investment management division. Currently, Goldman's IMD business includes Goldman Sachs Asset Management, which manages dozens of strategies in all markets for institutional investors, as well as its private wealth management division, which helps families and wealthy foundations manage their wealth. money. According to Goldman, the merger of Marcus with this unit will now result in a broader wealth management offering and should accelerate Marcus' growth by expanding both its customer base and its distribution channels.

"We plan to launch a broader wealth management offering combining Marcus' digital capabilities with the sales channels and more established products within the Investment Management division," said David Solomon, CEO of Goldman, John Waldron, new chief operating officer, and Stephen Scherr, the head of retail banking, said in a note to employees.

The reorganization indicates that Marcus customers could soon see much more than Goldman-branded loans and deposits, accessing a multitude of products that the bank normally offers to institutional clients and wealthy clients. Another growth area that Solomon, Waldron and Scherr refer to is Ayco, its financial advisory business for corporate executives. Marcus will provide banking services to millions of workers at Ayco's corporate customers, potentially broadening its potential base of users. Tim O'Neill and Eric Lane, co-leaders of IMD, will lead the new Consumer and Investment Management division. Harit Talwar, head of consumer digital finance at Marcus, will lead Marcus' expanded global business, while Omer Ismail will lead the Americas.

Marriage makes sense for Goldman, not only because of Marcus' increased growth prospects or the expansion of his wealth management clientele. With Marcus, Goldman may be able to create a new consumer credit business that generates assets seamlessly integrated into private GSAM and wealth portfolios.

After all, private debt, like Marcus loans, remains one of Wall Street's most fashionable markets. Small and large investors are looking for fixed income investments that can be adapted and outperformed by corporate and government bonds. For these reasons, consumer loans have attracted considerable interest from hedge funds, endowments and family offices. With Marcus, Goldman may be able to come to the table with a unique range of products, like LendingClub, Prosper and OnDeck Capital. In addition, the $ 1.5 trillion business investment management division is uniquely positioned to attract third-party capital to these credit markets, which are often financed by capital markets or other capital markets. bank balance sheets.

Goldman alluded to this opportunity in his memo. "By aligning Marcus' potential with the long-standing strengths of our investment management business, we see an important opportunity to serve a wider range of consumers and individual investors," said the bank. He continues to position Marcus as an advantage over incumbent operators in the wholesale technology, infrastructure and brand credit markets.

To see, this is exactly how Goldman will offer a larger and potentially rich wealth management platform, or how it will fit between Marcus and its GSAM and PWM customers. But Monday's shuffle suggests a big trend for Goldman. With so many changes in Wall Street, the company is looking for ways to strengthen relationships with its corporate, institutional and high net worth clients. As Forbes pointed out Friday in a column, Goldman is able to leverage its analytic and relational strengths to offer its customers non-essential quality services. If Marcus is truly a leading-edge consumer finance company, it should appeal to a wide range of GSAM and PWM customers.

Final result: In terms of relationships, analytic power, and technology, few people can beat Goldman. Now the bank can go back to Wall Street by leveraging its strengths to create a more sticky and lucrative customer base.

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When

Goldman Sachs
unveiled its personal loan and savings platform Marcus two years ago, this decision has been hailed as an investment bank push in a much less glamorous, even boring, financial area. Famous for its dominant position as a trading company and banker of the world's largest companies, Goldman relied heavily on Marcus as a cutting-edge digital banking application where ordinary people could find personal loans and interest rates. Attractive savings. Since then, Marcus has lent more than $ 4 billion to more than 2 million customers and has $ 29 billion in additional deposits.

Now comes a big twist. In a memo obtained by ForbesGoldman announces the merger of Marcus into its $ 1.5 trillion investment management business, creating a new consumer and investment management division. Currently, Goldman's IMD business includes Goldman Sachs Asset Management, which manages dozens of strategies in all markets for institutional investors, as well as its private wealth management division, which helps families and wealthy foundations manage their wealth. money. According to Goldman, the merger of Marcus with this unit will now result in a broader wealth management offering and should accelerate Marcus' growth by expanding both its customer base and its distribution channels.

"We plan to launch a broader wealth management offering combining Marcus' digital capabilities with the sales channels and more established products within the Investment Management division," said David Solomon, CEO of Goldman, John Waldron, new chief operating officer, and Stephen Scherr, the head of retail banking, said in a note to employees.

The reorganization indicates that Marcus customers could soon see much more than Goldman-branded loans and deposits, accessing a multitude of products that the bank normally offers to institutional clients and wealthy clients. Another growth area that Solomon, Waldron and Scherr refer to is Ayco, its financial advisory business for corporate executives. Marcus will provide banking services to millions of workers at Ayco's corporate customers, potentially broadening its potential base of users. Tim O'Neill and Eric Lane, co-leaders of IMD, will lead the new Consumer and Investment Management division. Harit Talwar, head of consumer digital finance at Marcus, will lead Marcus' expanded global business, while Omer Ismail will lead the Americas.

Marriage makes sense for Goldman, not only because of Marcus' increased growth prospects or the expansion of his wealth management clientele. With Marcus, Goldman may be able to create a new consumer credit business that generates assets seamlessly integrated into private GSAM and wealth portfolios.

After all, private debt, like Marcus loans, remains one of Wall Street's most fashionable markets. Small and large investors are looking for fixed income investments that can be adapted and outperformed by corporate and government bonds. For these reasons, consumer loans have attracted considerable interest from hedge funds, endowments and family offices. With Marcus, Goldman may be able to come to the table with a unique range of products, like LendingClub, Prosper and OnDeck Capital. In addition, the $ 1.5 trillion business investment management division is uniquely positioned to attract third-party capital to these credit markets, which are often financed by capital markets or other capital markets. bank balance sheets.

Goldman alluded to this opportunity in his memo. "By aligning Marcus' potential with the long-standing strengths of our investment management business, we see an important opportunity to serve a wider range of consumers and individual investors," said the bank. He continues to position Marcus as an advantage over incumbent operators in the wholesale technology, infrastructure and brand credit markets.

To see, this is exactly how Goldman will offer a larger and potentially rich wealth management platform, or how it will fit between Marcus and its GSAM and PWM customers. But Monday's shuffle suggests a big trend for Goldman. With so many changes in Wall Street, the company is looking for ways to strengthen relationships with its corporate, institutional and high net worth clients. As Forbes pointed out Friday in a column, Goldman is able to leverage its analytic and relational strengths to offer its customers non-essential quality services. If Marcus is truly a leading-edge consumer finance company, it should appeal to a wide range of GSAM and PWM customers.

Final result: In terms of relationships, analytic power, and technology, few people can beat Goldman. Now the bank can go back to Wall Street by leveraging its strengths to create a more sticky and lucrative customer base.