Goldman Sachs just hired a new partner to help bring it into the digital age.
Harit Talwar, who recently left his post as head of card services at Discover after 15 years, will be leading a new effort for the bank to lend money to consumers and small businesses over the Internet.
According to a memo sent to staff Monday (May 4) from CEO Lloyd Blankfein and COO Gary Cohn and reviewed by Quartz.
Goldman’s embrace of online lending follows the incredibly fast growth of startups like LendingClub and Prosper, which are attracting money from Wall Street and aim to make more loans available to more people over the Web.
But unlike the LendingClub marketplace model, Goldman will make loans directly. It’s also a way for Goldman to expand its banking business without going to the trouble of opening up actual branches.
“The traditional means by which financial services are delivered to consumers and small businesses is being fundamentally re-shaped by advances in technology, maturity of digital channels, use of data and analytics, and a focus on customer experience,” Blankfein and Cohn said in the memo.
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♦ Goldman Sachs migrating towards online lending and moving away from the brick-and-mortar bank model is a huge stamp of legitimacy for the online lending model. It's clear to see the success that new startups and established peer-to-peer lending sites like Prosper Marketplace and Lending Club are having and it was only a matter of time before the smarter institutions adopted the model for themselves.
♦ It's interesting that Goldman Sachs will be looking to loan to small businesses and consumers now, previously they were known to only lend funds to private wealth clients and major institutions. This is good news for people trying to get personal and small business loans, the more money available from competing lenders likely means better interest rates and less hassle in getting approved. Unlike peer-to-peer lending platforms, Goldman Sachs will be funding their online loans directly instead of through retail investors.
♦ Major changes like this make you wonder how long will physical bank branches last? Fintech makes sense for all parties involved, the lenders have lower overhead which in turn enables them to push less fees and lower interest rates to their borrowers. Potential borrowers can learn how to get a loan within minutes online and often get funded within days without going through the stress of meeting with a banker in person.