Future of Marcus:

During 2020 Investor Day, Eric Lane, Global Co-Head of the Consumer and Investment Management Division at Goldman Sachs, unveiled ambitious plans for Marcus to prove their legitimacy in the consumer banking battlefield. Marcus is aiming to become a single provider for its users where they can save, spend, borrow and invest. This centralized platform will enable the bank to achieve customer success goals more seamlessly by offering exclusive services to their consumers. Currently, Marcus offers saving accounts, personal loans and CD products. Additionally, Goldman has plans to launch a Marcus-labeled wealth capability tool by end of 2020 and modern checking capability in 2021.

This is how Eric expressed his vision of Goldman for Marcus during 2020 Investor Day:

Let me be clear about our ambitions; we are aspired to be the leading digital consumer bank. Our key competitive advantage is that we are a large bank with the balance sheet and strong brand. Yet, we have no legacy business or infrastructure costs. We started with loans, we added savings and cards and we are working to build out the balance of digital product suite including wealth and checking. Our value proposition is to provide our customers with products that are simple, transparent, valuable, personal, and secure.

Some additional figures detailing milestones achieved since the launch of Marcus in 2016:

Attracted 5 million customers

Raised $60 billion in deposits

Issued $7 billion in loans and card balances (includes Apple branded credit card)

Goldman Sachs, AWS of Financial Cloud:

With the emergence of neobanks this past decade resulting in several unicorns, it’s clear Goldman is cautious enough to not limit themselves to their own neobank style product, Marcus. Neobanks, even with their remarkable functions such as frictionless onboarding, minimal user experience, and attractive personal finance tools for millennials, yet there is no evidence of profitability. I wouldn’t deny the success of neobanks and what they’ve achieved in a short period of time. To become more clear on how neobanks have challenged the status quo of traditional banks on transactional-based revenue products, let’s look into some of their achievements:

Goldman is following a similar approach that BBVA followed. This approach offers a combination of a neobank (Simple) and a banking as a service platform (baas) through the concept of API economy. The API economy has allured innovative solutions like Twillio, Mulesoft and Zapier which translate, interconnect and broadcast data between different ecosystems and different languages.

In the financial industry, Stripe has done a tremendous job of empowering online marketplaces and startups to process and serve complex transactions in high volumes. This is all done with adding just a few lines of code. Stripe’s inventive API-based solutions has rewarded this 2010 founded startup with an eye-catching valuation of more than $20 billion.

screenshot from Goldman Sachs

In the path of acquiring more sustainable revenues, Goldman wants to offer their expertise as a service through the concept of API economy. In order to reach this goal, Goldman will eventually become a platform with an accumulation of different class services they’ve offered over the past 150 years. This platform will serve both themselves as an internal client and external clients including fintech startups, mid-size financial institutions and community banks. This will benefit Goldman with a dramatic reduction in their operational cost by offering their services on a larger scale. In this scenario, Goldman’s platform will be positioned as a financial cloud tool where internal and external clients can rent the complex regulated products like fraud as a service, compliance as a service, custody as a service, etc.

screenshot from Goldman Sachs

In an interview with Financial Times, Jason Goldberg, an analyst from Barclays, commented on Goldman’s strategies:

“Goldman Sachs certainly wants to be more bank-like and JP Morgan is one of the best. Goldman Sachs is paying for the same regulatory burdens as JP Morgan, so it makes sense to try and reap some of those rewards.”

Final Words:

We should anticipate that Goldman will have a long path to achieve these set goals. Marcus’s numbers are still a tiny fraction of giant consumer banking providers like Chase, Citi and Bank of America. As the days go by, we’ll find the industry becoming more competitive with a peaked interest in the open-banking movement. After reviewing Marcus’s initiatives, we’ll experience the future of consumer banking in a more centralized and bundled format where you can manage how to invest, borrow, spend and save with user friendly personal finance tools.