What we’ve been noticing: Despite extensive investment amid a wider diversification push, Goldman Sachs’ consumer banking business has yet to turn a profit.
The context: Goldman Sachs launched its digital bank Marcus in 2016 to expand its revenue streams by offering savings accounts to retail customers.
How’s it performing?
Successes: In an intensely competitive market, Goldman’s internally built consumer banking business has achieved some notable milestones.
The big takeaway: Marcus has successfully built up a large customer base in a competitive market already filled with high street banks, neobanks, and rival JPMorgan’s digital bank Chase. But its failure to break even despite extensive investment over six years raises concerns.
Marcus faces the same problem as many rival neobanks, with less than 5% of them breaking even. In theory, recent services added to Marcus, including a robo-advisor and more personal investment tools, should bolster engagement, generate top-line growth, and possibly cut losses. But Marcus’ failure to tie various products seamlessly into one brand has led to confusion and customer dissatisfaction, stunting uptake.
Goldman’s decision to create products in-house is both ambitious and hugely expensive. It could save time and money by following the lead of Morgan Stanely and focusing more on acquisitive growth. Regardless of bottom-line woes, Goldman’s vast resources and market-leading investment banking business will allow it to sustain losses and persevere with consumer banking if it views it as a venture with long-term potential.