This morning, Goldman Sachs introduced plans to amass B2B2C lender GreenSky in a deal value $2.24 billion. The acquisition, which continues to be topic to regulatory approval and is predicted to shut within the fourth quarter of 2020 or the primary quarter of 2021, is positioned to bolster the agency’s client enterprise and supply new merchandise and new methods to draw customers to its Marcus by Goldman Sachs model of finance merchandise.
Goldman launched Marcus 5 years in the past as a consumer-focused model partially to compete with a rising set of fintech startups, neobanks, and on-line buying and selling platforms which have sprung up over the past decade. Whereas it has attracted 8 million customers since launch — placing it forward of many so-called challenger banks — Marcus nonetheless trails Chime and Robinhood amongst banking and buying and selling apps (not less than amongst variety of customers).
However with the acquisition of GreenSky, it’s hoping so as to add one other option to pull customers into its Marcus funnel.
GreenSky operates a platform that facilitates loans for big-ticket gadgets like residence enchancment initiatives or elective dental or medical procedures. It allows manufacturers like Residence Depot, in addition to medical and dental practices, to supply installment loans to prospects on the level of sale, thereby growing gross sales and conversions for its purchasers. GreenSky then sells off these loans to a variety of banks and different lending companions.
The deal could possibly be seen as a method for Goldman to purchase its method into the “purchase now, pay later” development, providing Marcus customers extra methods to finance their purchases. That market has taken off recently, as evidenced by Sq.’s acquisition of Afterpay, PayPal’s acquisition of Paidy, and Amazon hanging a deal to supply BNPL financing via Affirm.
However based on Stephanie Cohen, the worldwide co-head of Shopper & Wealth Administration at Goldman Sachs, the acquisition is as a lot about bringing GreenSky’s prospects into the Marcus ecosystem. She additionally believes that by bringing GreenSky into Goldman Sachs and lending off its stability sheet, there’s no restrict to the dimensions at which it might probably develop.
That stated, don’t anticipate Goldman or Marcus to start providing BNPL lending for on a regular basis procuring anytime quickly, as Cohen says GreenSky is engaging partially because of the big-ticket nature of residence enchancment lending.
To be taught extra in regards to the agency’s plans, we spoke with Cohen in regards to the deal and requested how GreenSky suits in with Marcus and the remainder of Goldman’s enterprise. The complete interview, barely edited for size and readability, is beneath.