Marketplace Lending Is In Goldman’s ‘Wheelhouse,’ CEO Says | Bank Innovation

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It’s been less than a year since Goldman Sachs unveiled its marketplace lending arm, Marcus. How has the platform been doing so far?

Marcus has lent more than $1 billion since the launch, and plans to “cross” the $2 billion threshold by the end of the year, Chief Executive Lloyd Blankfein said in an interview yesterday.

The adoption of Marcus will continue to grow exponentially, Blankfein said, partly because the bank knows what it’s doing. “I am very conscious about the limits of our expertise. These non-recourse loans that we provide, those are about risk management, about digital experience, about distributing things digitally, about algorithmic kind of approaches to risk management,” he said. “[Things that are] in our wheelhouse, really things that we have been historically good at.”

Customer experience, Blankfein noted, is the one thing the bank hasn’t had enough experience in, and is still working on. “We talked to thousands of people while developing this product, we offer no fees, the information is available online, loans are made fairly quickly,” he said. “The way margins are in this business, there’s still plenty of room for us to make great return on this, and this is something that’s beneficial to consumers.”

Currently, Marcus offers unsecured loans between $3,500 and $30,000, with fees that are “three, four, or even 500 basis points lower that credit card fees,” Blankfein added, which can be as high as 20% in interests.  

Goldman’s subsidiary operates in a separate capacity, in a more of a “startup” fashion, Omer Ismail, COO of Marcus, said recently, aiming to spread its innovative approaches to other aspects of Goldman’s operations.

“[We] wanted to grow [Marcus] slow, to make sure we were doing a good job, but we are going to grow this thing,” according to Blankfein.

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