Goldman Sachs' consumer banking division, Marcus, has lost $1.3 billion since 2016 – and still faces considerable risks:
That figure has been driven by spending on startup acquisitions, cloud storage space, and tech talent hiring, among other factors. The bank has also seen loans go bad at a higher rate than rivals have, with one potential explanation being that Marcus launched without a collections team to press delinquent borrowers, something it's since rectified.A high loan default rate dampens the chance for profitability.
Consumer banking could hurt its reputation as an upmarket bank.While it makes sense that the bank is seeking to be more well-rounded — its income from the channels it's traditionally known for like trading and merger advising has — Goldman's reputation has been as a leader of high finance.
It remains to be seen whether Goldman Sachs will overcome the risks to turn its retail banking play into a profit generator. It's possible that high loan default rates and the ongoing cost of retaining tech talent will remain consistent problems, or that Marcus will simply be unable to carve out a niche in retail banking against major competitors like JPMorgan Chase and Wells Fargo.
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