The New York-based investment banking powerhouse is developing a unit that will make modest loans to individuals and small businesses, mostly online, in keeping with the bank's recent techno-evangelism.
It's a potentially lucrative business, even if it's at odds with Goldman's image, but at least one consumer advocate is wary. The lack of direct contact with customers is a "red flag for me," said Sister Nora Nash of the Sisters of St. Francis of Philadelphia.
Nash has spent the past three decades working with the Interfaith Center on Corporate Responsibility, an advocacy group that comprises about 300 faith-based organizations overseeing $100 billion in assets. The center uses its investments in publicly traded companies from Goldman Sachs to JPMorgan Chase (JPM) and Chevron (CVX) to urge changes it says would benefit customers and communities.
"Much of banking today is not real banking," Nash said in a recent interview. "The bank is there for the purpose of serving the people. That is really not happening."
Still, there are upsides to banks and finance companies relying more on technology in their lending decisions, said Sean Egan CEO of Egan-Jones Proxy Advisory and Ratings Co.
"We know our clients better now than we ever did, since we now know what they actually do and not just what they report," Egan said.
He isn't too quick to applaud Goldman Sachs' latest endeavor, since he sees some risks inherent in the bank investing in a space outside of its core business where there are already other established players.
"Since the days of the two Johns, John Whitehead and John Weinberg, the ethos of Goldman has been to put the customer first," Egan said, referring to two of the bank's best-known former top executives. "This policy and a lot of hard work have enabled Goldman to become 'a,' and in many cases 'the,' preeminent investment banker."
To win consumer business, the bank would basically have to participate in a "beauty contest," he said.