Can there be something in corporate names that start with G?
Why is it that GAFA has Google first?
What is the tipping point that turns a corporate name into a verb?
Malcolm Gladwell may have insights on these questions and a great story to tell us, as I urge you to start thinking about Goldman’s transformation.
In Goldman is leading the “Sell-side empowers the Buy-side” movement we looked at Goldman’s move from a top-tier proprietary investment bank and broker dealer, to a player that empowers its clients.
We know that Goldman acquired the GE bank, which has gone relatively unnoticed (up to now) in the fierce consumer banking battle with digital banks. There has been no conference panel with the Movens of the space, in which Goldman’s bank arm has participated. The consumer lending business on the hand, has been discussed often on Lending tracks at conferences. At the recent Lendit conference in London, the insurgents (i.e. Fintech startups) highlighted the delays to launch of the Marcus offering as evidence of Goldman’s (any incumbent’s for that matter) inability to be agile and to gain on “Time to market”.
The Marcus offering has been talked a lot in the press and the mushrooming Fintech media world (I agree that there have been delays to the Marcus launch) and now we know we details of the first product offering:
- Marcus is the consumer lending arm of Goldman.
- Marcus is as we speak going, to flood the “around money” media space (the Personal Financial management- PFM). They will be on Facebook. Youtube, Hulu etc.
- Marcus has a very strong messaging component.
Dustin Cohn, the head of brand management for Goldman’s new consumer lending arm, Marcus by Goldman Sachs, said the bank’s aim was to “destigmatize debt and help consumers explore new ways of managing their debt.”
This is Apple like. It is about the “Why” not the “What”. If I had credit-card debt, I would feel the urge to hop on a plane to run and sign up for this new consumer debt-consolidation product because:
- The consumer pays a fixed interest rate on the loan (which includes a profit margin for Goldman). It has no complexities (APRs and all the usual hidden in a credit-card type of arrangement).
- It is simple and clear. No fees for late payments.
- It is transparent and simple! No credit-score changes! There is nothing hidden, no optionality (hiding misunderstanding and potentially Goldman outsmarting the user).
Watch the ads to fully understand the messaging (four ads of 30sec each). What is your favorite? Engage in the conversation on the Fintech Genome “Why sign up on Marcus, Goldman’s consumer debt-consolidation offering?”
Insurgents claim that Goldman’s Altfi “go to market”, shows how non-agile incumbents are. True that there were delays in the launch. Going forward, the question of how quickly and efficiently Goldman can change and adapt their consumer lending offering, when the market conditions call for it (i.e. pivot offering to beat competition or to scale in other areas) is still on the table.
Whether Goldman will succeed in the consumer lending space, will be seen. What we do know up to now, is that Goldman is successfully and swiftly making business transformations, when the market conditions call for it. Goldman has been making painful business pivots much faster than other incumbents.
Goldman restructured their securities division and 18 partners have left in 2016 as a result of this restructuring.
Goldman is engaging in head to head competition with Morgan Stanley (Goldman has been losing on equities sales and trading) in the retail market.
Goldman has shifted from a prop house to one with empowers its clients, the Buy side.
Goldman has made a strategic shift to increase cross-selling to its clients. This is an ambitious metric to go after, simply because traditionally banks have not been able to pass a 10% cross selling level (i.e. on average only 10% of clients consume 3 or more consumer offerings from one banking entity; 90% of clients have more than one provider for 3 or more of their banking products).
Will Goldman become a verb by using technology and offering “invisible services” under their brand?
Will they be the first incumbent to accelerate cross-selling via Fintech?
Lets watch whether the tipping point unveils itself. Goldman is also under-the radar adopting the API philosophy, to offer access it SecdB database but also very aggressively through its strategic investments in Fintechs. Kensho and Symphony, are the best examples of the Open API philosophy in action.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.