Goldman’s Future for Marcus Includes Wealth Management

Need to Know

• While deposits to Marcus, Goldman Sachs’ consumer banking app, have hit $97 billion, Goldman says it expects to continue losing money on Marcus until 2022.
• Goldman plans to launch a wealth management tool within Marcus,—known as Marcus Invest—this quarter and is considering acquisitions to scale the growth of Marcus.
• Marcus will also debut a checking account in 2021.
• Goldman is targeting at least $125 billion in deposits to Marcus by 2024.

Analysis

Goldman’s consumer banking app, Marcus, is seeing slow but steady growth, with the investment bank planning the launch of a number of new features to the app in 2021.

However, the company says it anticipates Marcus will not break even until 2022, despite deposits to Marcus having now hit $97 billion. In an earnings call this week, Goldman Sachs CEO David Solomon said the COVID-19 pandemic has led to delays in the app’s growth; Marcus was previously expected to reach profitability in 2021.

In the earnings call, Solomon noted that Marcus’ long-anticipated wealth management tool, known as Marcus Invest, is slated to launch this quarter. That, in addition to the Marcus checking account and debit card the bank plans to launch by the end of 2021, which will allow it to more strongly compete with other fintechs in the same space. Of the checking account, Solomon said Goldman would be launching an “enhanced customer experience that is simpler, and more transparent than what traditional banks have historically offered.”

Solomon also said that the bank is considering acquisitions to scale Marcus’ growth. “We are particularly excited about the launch of Marcus invest platform in the U.S. this quarter, which for the first time brings the investing expertise of Goldman Sachs directly to mass affluent customers,” he said, adding that Goldman plans to expand Marcus to the UK in the second half of 20201.

“As we grow, we will not only serve customers directly through the Marcus platform, but we will also serve customers through our growing partnership channels. We’re always looking for ways to accelerate our strategic growth plans if something came along that helped us accelerate or advance our strategic growth plan.”

Goldman is targeting at least $125 billion in deposits to Marcus by 2024, while loans tied to its cards should reach at least $20 billion the same year. Goldman reported Marcus’s financial results this week as part of its consumer and wealth management division, which hit $165 million in net earnings in Q4, a 21% increase over the previous quarter. However, Goldman did not disclose how much Marcus itself lost over the period.

Since its launch in 2016, Marcus has grown slowly but steadily, gradually launching more features to allow Wall Street mainstay Goldman to strengthen its foothold in consumer banking. In April of this year, Goldman debuted MarcusPay, an installment loan product, in partnership with JetBlue, and added personal finance tools, called Marcus Insights, in September. Marcus grew by $4 billion in deposits in the quarter ending October 2020.