NEW YORK (Reuters Breakingviews) - A club under the San Francisco freeway is one of the last places you’d expect Goldman Sachs to throw a party. But it’s not investment bankers gathering here. Instead, it’s a comedy show arranged by Marcus, the company’s online retail bank. The unit’s edgier approach to business - and marketing - is giving Goldman a buzz it has sorely lacked.
The $98 billion firm run by Lloyd Blankfein has struggled since last decade’s financial crisis to stand out as the elite performer it once was. Poor form in trading fixed income, currency and commodities in recent quarters is a big reason why.
Judging by results for the first three months of this year, unveiled on Tuesday, that division is improving. FICC revenue doubled from a year earlier, to $2 billion, the best performance in three years. But it’s far from its glory days: its average quarterly top line in 2009 was almost $6 billion. And an annualized return on equity just above 15 percent marks Goldman as a whole as a solid franchise, but it doesn’t exude excitement.
Marcus does. It now embodies the hungry approach to business that used to define Goldman. It’s growing fast – from a small base – boosting retail loans by more than 50 percent to $3 billion in the first three and a bit months of this year. And that was after Blankfein urged executives to grow slowly and get it right, Marcus’s chief commercial officer, Omer Ismail, told attendees at the LendIt Fintech conference in San Francisco last week.
It’s also cranking out deals. On Sunday Marcus bought Clarity Money, a 15-month-old app allowing people to aggregate savings accounts, loans, insurance and the like. It’s becoming the hot area of fintech. Online-lending newcomer Upgrade as well as big old Citi pitched similar services at last week’s conference.
In recent months Marcus has also bought the assets of e-lender Bond Street and credit-card startup Final. Ismail calls these aqui-hires. He’s getting an impressive new employee with Clarity Money: Adam Dell, a serial entrepreneur and investor, whose brother Michael founded computing firm Dell. He joins Goldman as a partner. Marcus is also open to deals in everything from revolving credit to wealth management.
It’ll be a while yet until Marcus adds much to Goldman’s bottom line – perhaps $450 million in pre-tax profit by 2020, the investment bank projects, less than 4 percent of what analysts reckon Goldman will rake in overall. For now, though, the upstart division is providing a breath of fresh air.
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