Goldman plans to have $28 billion in online loans on balance sheet by 2020
Goldman Sachs sees online lending as its biggest revenue growth opportunity over the next three years.
Hardly a day goes by without Goldman Sachs being mentioned in fintech-related news. But the bank does nothing to stem speculation. Quite the opposite, in fact.
Last week, Harvey M. Schwartz, chairman and co-chief operating officer of Goldman, made no secret of the importance of online lending to the bank. In a presentation at the Barclays Financial Services conference, Schwartz named Goldman’s online lending initiatives as the bank’s top revenue driver over the next three years.
By 2020, Goldman expects to earn more than $2 billion in net revenue from its lending and financing efforts. Among these efforts, its consumer lending and deposit platform, Marcus, is the most prominent.
Marcus is an online lending platform that funds loans using deposits from Goldman’s banking operations. Launched in the United States in October 2016, the platform has already lent more than $1 billion and plans to cross the $2 billion mark by the end of the year.
Goldman expects the Marcus lending and deposit platform – which appears to be coming to the UK – to generate more than $1 billion in revenue by 2020. The bank then plans to lend money to high net worth individuals and corporations worth another $500 million+ each. The $2 billion Goldman sees generating from lending efforts over the next three years is double the expected net income from any other business at the bank. For context, he considers his company-wide net revenue growth opportunity to be around $5 billion.
Lending and deposit platform Marcus targets “preferred consumers” with FICO scores above 660. It has already attracted more than $15 billion in retail deposits. The bank’s corporate lending strategy will focus on “key growth areas” including middle market lending, real estate, alternative energy and structured credit in growth markets.
Page 19 of Schwartz’s presentation shows that Goldman plans to have $28 billion in online loans on its balance sheet by 2020.
In addition to its own business, Goldman is also actively investing in new online lending platforms. Most recently, he committed £100m of debt and equity to UK-based benefits lender Neyber.
Speaking to CNBC’s Jim Cramer in June, Goldman Sachs CEO Lloyd Blankfein (pictured) said the plan was to gradually build out the Marcus platform.
“But we’re gonna grow, you know, we’re gonna grow this thing,” he added.