Goldman Sachs Group Inc. (GS) launched its Marcus product in October 2016 with one major goal in mind: eliminate the pain points everyday consumers face in accessing financial services.
A year and a half later, Marcus head Harit Talwar is still wildly bullish on his product's capabilities.
Speaking at the CB Insights' Future of Fintech Conference in New York Wednesday, Talwar explained what makes Marcus different from the myriad other fintech startups making headlines from Silicon Valley to Wall Street. To start, it works to answer three major issues the everyday bank customer manages.
"People's relationship with money is broken," Talwar said. They are overwhelmed by accounts and don't feel like they're in control. That means they don't like to budget because, simply put, they're afraid to budget.
Next, "The borrowing process is cumbersome, opaque and it humiliates the consumer in the process," Talwar said.
And finally, "Those who do save, they feel disrespected by the financial services industry because if you've accumulated, say $15,000 in savings, you feel you've done right and you have. But the financial services industry doesn't treat you well."
That's where Marcus aims to step in. "Simple, transparent and always on the side of the consumer," Talwar calls the service. Marcus offers no-fee personal loans and high-yield savings accounts, plus has plans to move into the UK and consider cards, retirement savings plans and wealth management.
But that's not what differentiates Marcus, Talwar said.
"Unlike fintech startups we are a bank and we are proud to be a bank because we have the balance sheet and the ability for risk management," Talwar said. "We have a balance sheet ... and we have a track record of building platforms that scale up."
Goldman Sachs was founded in 1869.
What's more, Marcus' Goldman Sachs roots ensure that it has the feel of a startup, but the important backing and breeding of a major white glove bank. As far a fintech goes, Marcus boasts what many might consider the best of both sides of the term.
But that's not to say its competition doesn't exist.
Talwar wouldn't go as far as to publicly disclose what he considers Marcus' biggest source of competition, but he admitted that the consumer itself is a headwind.
If you have a backache, you talk about it and people offer you remedies. When you have credit card debt, you're unlikely to talk about it because you're too embarrassed. That's the biggest hurdle to Marcus' growth - breeding widespread customer knowledge and word of mouth.
"We're not competing with others. We're competing with consumers ... our biggest competitor is consumer inertia," Talwar said.
Talwar added that the consumer his firm is presently trying to win over will be managing a changing landscape in coming years, as interest rates rise and the recovery nears its ninth year.
"While the macroeconomic environment is looking very good, consumer balance sheets and consumer debt is at the pre-2008 levels. If you are a lender and cons have leverage up again, you should be careful. The interest rates on those borrowings are low, but those interest rates will go up," Talwar said.
And at a consumer level, Marcus doesn't think it's right to lend to someone who can't demonstrate ability to make payments. Talwar said doing such would be like handing a visibly over served bar patron another drink.
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