Goldman Sachs (NYSE:GS) has announced the launch of its online lending platform, Marcus by Goldman Sachs. A statement from the bank reads, “Marcus by Goldman Sachs is a new business that benefits from the firm’s 147-year history of financial expertise, risk management and customer service.” The website for the platform went live Thursday.
The platform was named after one of the banks founders, Marcus Goldman. There have been months of speculation about how the company would design its consumer lending product. Harit Talwar, head of Marcus by Goldman Sachs, said, “Marcus offers an option for consumers who are searching for a simpler alternative to credit card borrowing, where rates can change and multiple fees can be charged.”
The Marcus platform is described as a consumer friendly lending alternative. The platform will offer unsecured personal loans of up to $30,000. The two-to-six-year fixed rate loans will be offered at interest rates of 5.99 percent to 22.99 percent.
Customers will be able to choose the length of the loan, the monthly payment and the payment date. Customers will also have an option to defer one month after making 12 payments on time, extending the term of the loan an additional month. There are no origination or prepayment fees for the loans.
The Marcus platform is targeted at prime borrowers looking to consolidate their credit card debt. Marcus will be initially available to millions of prospective customers through an email campaign. A code will be mailed to millions of pre-selected customers that must be used for the initial loan applications. The bank has reportedly sent invitations to millions of people who have more than $10,000 in credit card debt. A broader rollout is planned for the near future.
Consumer lending is new territory for Goldman Sachs. The company has long avoided Main Street in favor of big clients like corporations and investment funds. But now, Goldman sees an opportunity to enter the market as borrowers move their banking to digital-first platforms and believes its strengths in risk management and technology will work well for consumer lending.
Goldman converted into a bank holding company in 2008 to stay afloat during the financial crisis. The company recently bought $16 billion in deposits from General Electric and launched GS Bank, an online bank. Goldman now holds traditional deposits and is regulated like other consumer banks like JPMorgan, Wells Fargo, Bank of America and Citibank. The company is considered one of the most scrutinized financial institutions in the world.