Goldman Sachs Group
is swiftly delivering on its promises to expand its offerings in an effort to boost returns.
The investment bank, which held its first investor day last week, is in talks with
(ticker: AMZN) to offer small-business loans, according to a Financial Times article. Such a product could go live as soon as March, the report says.
declined to comment.
With a stock that has been trading sideways for more than a decade,
(GS) last week outlined a path to delivering a return on equity of 13% over the next three years, up from 10.6% in 2019.
Key to delivering that objective is transforming the investment bank— once known for its robust trading desk—into more of a consumer-oriented, universal bank. That process means cutting $1.3 billion in costs, with more than half of the savings, or $700 million, coming from the bank’s global markets business, which houses traders. Meanwhile, the bank plans to expand its newly created Consumer & Wealth Management Business in part by building up its Marcus lending platform.
An Amazon-Goldman Sachs partnership would provide a cost-effective way for the bank to grow its lending arm versus working to acquire loans on its own. But there are reasons to be cautious.
The bank acknowledged last week that there is a lot of competition in the space. Still, it noted that unlike incumbents trying to build out tech-enabled products while being bogged down by history, Goldman Sachs is starting with a blank slate.
“No legacy technology, no retail bank branches,” Eric Lane, head of Goldman’s consumer division, said last week.
Goldman’s reported efforts with Amazon mark another step in the bank’s continued efforts to court big tech. In 2015, the bank hosted its annual shareholder meeting in San Francisco and now-former chief executive Lloyd Blankfein said the bank was a “technology company.” Now, with David Solomon at the helm, the bank is pushing more aggressively into tech. It partnered with Apple last year to deliver its first credit card, for example.
Goldman’s shares climbed 1.2% as of early afternoon, while the S&P 500 was up 0.8%.
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