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Goldman Sachs revealed earlier this week it’s developing an investment platform that will be offered via its digital offshoot Marcus and target US’ mass affluent segment, consisting of individuals with liquid assets between $100,000 and $1 million, per American Banker.
These consumers collectively hold $9 trillion in assets, per Goldman CFO Stephen Scherr. The move has been conjectured ever since Goldman moved Marcus into its investment management business in 2018.
Here’s what it means: The new product will likely enjoy success as Goldman eyes winning strategies to drive uptake.
- Goldman will look at partnerships with employers to lure customers to its investment platform. Scherr said that Goldman-οwned Ayco, which works with corporate executives across 220 of the top 1,000 US companies, has the potential to facilitate the banks’ customer acquisition efforts for its new wealth product. Similarly, banking peer Morgan Stanley announced in February that it’ll acquire Solium Capital in a deal that will help it gain access to Solium’s clients — who are salaried employees spread across over 3,000 companies and seen as the future affluent customers of its wealth management business.
- The wealth management product could be attractive as it includes both digital and human services. Offering human advice is a smart move: Consumers prefer hybrid wealth advisory models, per research from Accenture. As Goldman targets the high-end of the mass market with its new product, we expect the desire for interaction with humans to rise and for more affordable alternatives from robo-advisors, such asWealthfront, to result in insignificant price pressures.
The bigger picture: Neobanks and incumbents should feel the pressure as Goldman forges ahead expanding its consumer arm.
Goldman’s focus on Marcus will likely accelerate amid the strong performance of its digital offshoot and declining revenues in its core business.In the US, Marcus already offers savings products and personal loans, while in February it announced a cobranded credit card with Apple.
And Goldman is expected to expand Marcus’ product suite further,including with insurance and mortgage offerings. Although some neobanks such as Chime are performing well — the startup recently reached unicorn status and has been growing rapidly, with over 3 million accounts — we expect Marcus to be relatively immune to competition given Goldman’s solid and expansive digital strategy and broad customer base.
On the other hand, Marcus poses a serious threat to neobanks and incumbents as it looks to become a one-stop shop for tech-savvy consumers.
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