Goldman Sachs’ decision this week to pull out of retail banking followed disagreements over the strategy CEO David Solomon took against his subordinates in one case, people familiar with the matter said.
Solomon had high hopes for Goldman’s Marcus-branded consumer project, which began in 2015 under his predecessor, Lloyd Blankfein. Solomon, who became chief executive in 2018, viewed the operation as a nascent fintech that could provide the Wall Street bank with the kind of stable income many analysts believe is needed to boost valuation in the stock market.
But it failed to turn a profit and investor unease with the project led Solomon Tuesday to scale back ambitions for Marcus and split it in half.
Solomon had argued that to build a deeper relationship with consumers, Marcus should offer checking or checking accounts in addition to savings and loans. When Goldman’s consumer division executives claimed they had no competitive advantage in auditing, Solomon disagreed.
Goldman announced in January 2020 that it would offer a checking account for Marcus by 2021, but the project fell short of target and has not been made generally available to retail customers.
“[Solomon’s] view that was. . . if we want to be the digital bank of the future and have tens of millions of customers on the Marcus platform, how can we not have a primary control relationship with those customers?” said one of the people familiar with the matter.
Goldman declined to comment.
The project became more expensive as Goldman’s technology team chose to build a new cloud platform for the checking product from scratch, quashing a request by the consumer department to rely on technology the bank used for its Apple Card product, they said. the people.
In the process, the ill-fated Marcus payment into the bank account has become a symbol of one of Goldman’s biggest corporate turnarounds, with the Wall Street firm pouring billions of dollars into Main Street’s banking operations.
Marcus did manage to attract more than $100 billion in deposits, providing Goldman with cheap financing. It also generated $1.5 billion in revenue last year.
Under the restructuring announced Tuesday, consumer banking will be brought under Goldman’s asset management business. Meanwhile, Goldman’s credit card partnerships with companies such as Apple and General Motors will include a new “platform solutions” business, and an online lending company called GreenSky, which was acquired this year.
The disagreements over strategic direction that erupted over the eight years of the Marcus product came as Goldman cycled through three different heads of consumer banking, from executives with retail finance experience to his own bankers and tech engineers.
Blankfein’s first tenure at Marcus was Harit Talwar, the former chief of American cards at Discover, who went on to staff the company with other consumer banking veterans. Talwar left Goldman last year and Peeyush Nahar was hired last year to lead day-to-day consumer affairs. Nahar has a technology background with previous stints at Uber and Amazon.
Nahar reported to Stephanie Cohen, who had an investment banking background before Solomon promoted her to co-head of the soon-to-be-gone consumer and wealth management division in 2021.
In Solomon’s reshuffle this week, Cohen, who also led strategy for Goldman and was a champion of the GreenSky deal, will lead the new platform solutions business, according to those familiar with the matter. Nahar becomes co-chief operating officer.