Page 19 - May 2018 Disruption Report Flip Book

DIGITAL BANK JANMUAAYRY20210818
Digital banking is now in Goldman Sach’s wheelhouse
Goldman Sachs is acquiring personal financial startup Clarity Money—its 16th fintech acquisition over the last three years. Clarity is a mobile app that allows customers to link their bank accounts and accounts with other financial providers, like SoFi, Acorns and Lemonade, and manage all accounts on the platform. The app provides its users spending insights and helps automate and manage savings goals, credit scores and recurring bill payments. Clarity will continue to offer products and services to customers on the app and offer Marcus products in the near future.
“The modern consumer bank is creating a digital storefront where people feel they can get to and get control of their finances,” said Harit Talwar, head of digital finance at Goldman Sachs. This is not a short-term monetization play, according to Talwar. “There is tangible financial value, but we don’t want to underestimate the strategic consumer-centric value which improves over time,” he said. “This is very important for our shareholders too. It gives us competitive advantage in making our relationships with our loans and deposits customers over time stickier, gives us the ability to manufacture more products for the customer, and, yes, there is also revenue that Clarity Money in its existing operating model gets by distributing products and services for others.”
“Challenges courting talent in these fields are significant, and Clarity gives GS an express lane to building out its design and engineering resources,” said Jordan McKee, an analyst at 451 Research. “I view the addition of Clarity’s customers as a tertiary benefit of the deal – one that is obviously still significant but to a lesser extent than the technology and talent that GS adds with the acquisition.”
Goldman Sachs’ consumer banking platform, Marcus, plans to evolve into a full-scale digital bank by eventually introducing wealth management, credit cards and retirement offerings. After the acquisition of Clarity is completed, Marcus’s customer base will more than quadruple to 1.35 million customers. To date, Marcus has attracted $20 billion of deposits and $3 billion in loans. Marcus plans to expand its offerings internationally with its imminent launch of savings products in June in the UK, followed by loan products in 2019. Later, Marcus will expand rollout its product offerings in Germany.
In a CNBC interview, Goldman Sachs CEO Lloyd Blankfein explained that his company has “not lost their minds” by moving in to the highly competitive consumer banking business with Marcus. “The consumer business has moved to us,” he argued. The digital world allows Marcus to scale without the burden of brick and mortar expenses.
“If you are lending to 50 million people, it is math, it’s algorithms,” said Blankfein. “It’s distributed electronically and, in the case of consumer lending, digitally. We’re very good at algorithmic
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