Goldman Sachs Pivots on Marcus Strategy to Build a Full-Scale Digital Bank

Goldman Sachs Pivots on Marcus Strategy to Build a Full-Scale Digital Bank


Goldman Sachs’ decision to pivot strategy for Marcus came as a surprise to many market analysts. Whether it was because of uncertain financial services market conditions or increasing competition in consumer finance, it makes sense why Goldman Sachs decided to pivot on Marcus.

Goldman Sachs’ make it a priority to expand to a new customer base rather than retain and sell new products to their existing customers was not on par with its core strategic values. Usually, pivots in product or service strategy happen all the time in the financial industry, especially when organizations enter a new market. With new strategic changes, Sachs is better positioned to meet new customers’ needs and maintain a strong market position. 

Let’s dive into more details about how Goldman Sachs make a significant pivot to change their strategy around Marcus’ and scale back its ambitious plan to become the leader in consumer finance.

Marcus: The Reasoning Behind the Retreat

Bringing Marcus by Goldman Sachs into the spotlight to new customers was not a far-fetched plan, but increased market competition made the company realize they had to step back and shelve the plan. For instance, the New York bank will no longer offer the checking accounts that would’ve targeted wealth management clients.

The pivot from the investment bank has put a dent in the ambitious initiatives Goldman Sachs had for Marcus. While it is rare, Goldman Sachs is taking a step back on competiving against the major retail finance banks. However, the idea of creating a full-scale virtual bank through Marcus is not on hold.

David Solomon, Goldman Sachs CEO, conducted an hour-long press conference stating how some of the strategic initiatives didn’t turn out as Goldman Sachs had hoped for Marcus. Solomon pointed out that the analytical misjudgment has forced Goldman Sachs to take these steps.

Solomon also stated that there has been high executive turnover, regulatory issues, consistent financial losses, and product delays that ultimately forced Goldman Sachs to move away from its original strategy of creating a large-scale dedicated digital bank.

What are the Future Plans of Marcus by Goldman Sachs?

Interestingly, the future plans of Marcus by Goldman Sachs are more customer-centric. What is Goldman Sachs doing with Marcus now? Well, instead of trying to get a massive stream of new customers, the company will now focus on the existing Marcus customers. Simultaneously, the company will tap into the bank’s wealth management channels to target the FinTech market products.

It is a stark realization for Solomon, who took the mantle as the company’s CEO nearly four years ago and wanted to dominate the consumer business space. But it is one thing to explore new possibilities and implement strategic plans to leverage those possibilities.

Market Position of Marcus

Since 2016, Goldman Sachs has positioned Marcus to diversify its revenue and help the company move away from core advisory operations and trading. It is vital to understand that major retail banks like Bank of America and JP Morgan Chase have a higher valuation than Goldman Sachs. After all, the focus of Goldman Sachs revolves around Wall Street.

Strategic Shift and Missteps

After the scrutiny by analysts, Solomon concurred that the strategic shift became a necessary step. During the press conference, Solomon gave analysts the stage to answer critical technical questions. One of the analysts, Christian Bolu, stated that the new FinTech startups like Cash App and Chime have done very well, while Goldman still hasn’t been able produce in this space.

Bolu pointed out that the company’s execution strategy couldn’t address consumer market challenges. Not to mention, Bolu pointed out that the company has had multiple leadership changes, and looking back – it took inconsistent steps over the last five years.

Brennan Hawken was another analyst that took a direct approach and communicated the reasoning to Solomon about the need to pivot from future products and promises.

In all seriousness, Hawken pointed out that not many investors of Goldman Sachs are over the top about diving into consumer business. So, it may not be a bad decision to roll back from the original plans and move forward in a more strategic direction that makes sense to the investors.

Ironically, what’s odd is that Solomon had stated that Marcus would hit break-even in the consumer business. But the fact is that the project was not able to meet high consumer expectations and was not making enough money. It became the main reason for Solomon to concede the entire department.

Apple Issues

An Apple Card account, one of the hallmark aspects of Marcus, has also become less profitable than the executive heads at Goldman Sachs had expected. Technically, Apple customers didn’t maintain the same balances as the bank had expected.

In reality it made significantly less revenue that the original target throughout this partnership. According to Solomon, there are always two sides to renegotiation and it rings true when it comes to the Apple-Goldman Sachs arrangement.

Currently, the goal is to make it more transparent and extend the partnership until 2030. From Solomon’s perspective, this move makes sense since the stock has been consistently under pressure and the company is losing a lot of money in consumer operations.

Solomon stated that selling services to consumers of wealth management decreases customer acquisition costs. Nonetheless, Goldman Sachs is making a broader shift towards FinTech. Solomon understood that growth at a significant cost is bound to impact profitability and overall valuations.

The CEO made it clear that the communicated aspirations were too broad and that is why the company is now pulling back. While it comes across as a dramatic change, internal and external analysts had predicted that this new direction may not pan out for Goldman Sachs. The firm confirmed that it plans to move back to become a major consumer finance digital bank on a global scale.

Is New Branding a Good Idea?

Goldman Sachs is established as a B2B (business-to-business) brand that caters to investment banking. For almost 150 years, Goldman Sachs has focused on its core business offerings like investment banking and securities and investment management. So, the need to adopt a new brand image and dive into the consumer market was a warning sign from the start.

There is nothing wrong with brand expanding it’s horizons, but it was generalized and not multi-dimensional. Besides, the competitive drive to deliver in consumer banking is not the same as investment banking. That is because consumer banking demands extreme consistency in B2C marketing, including customer experience, digital marketing, and call centers.

Focus on Wins Rather than the Prize Size

When you review the long-term profitability and viability of stretching a brand, a company like Goldman Sachs should’ve focused on wins rather than the size of the winnings. By no means – Goldman Sachs’s attempts to change core business offerings have been futile.

Marcus made a significant impact in the changing marketplace. In fact, despite the rough journey, this Goldman Sachs venture in consumer banking has netted the company over $110 billion in deposits, secured 15+ million consumers, and extended more than $19 billion in personal loans.

But Marcus ran into the fourth wall when the company failed to assess whether or not it could take over the market. Despite all the core competencies and launch expenses, it has to sustain to grow. Since consumer inertia has become an issue, Marcus offers a 1.5% of high-interest rate to convince potential customers to make a switch.

Plus, awareness building and maintenance cost the brand more money. There were also new infrastructure and systems that required consistent maintenance and upgrades. All of this amount to $1.2 billion of losses for Marcus in 2022.

The stand-alone win in consumer banking is a far-fetched ambitious goal – even for a major player like Goldman Sachs. And David Solomon recognized the problem. The consistent 2022 losses were opposite to promises made in the 2020 investor presentation. In fact, Goldman Sachs had forecasted that consumer banking would achieve break-even in 2022 and yield positive returns for the next five years.

More Focus on Core Business

Brand stretching works out only when it is done well and can live up to practical consumer expectations and meet market reputation standards. But oftentimes, there are halo and after-effects of the image that is nothing more than a mirage.

Instead of generalizing how to leverage image benefits, Goldman Sachs should be careful about stretching new initiatives and focusing on core business perks. And in terms of brand stretching and building, this looks like the newly adopted approach by Goldman Sachs.

Practically, Goldman can stretch out its brand and leverage the core business at the same time. But it will take some reorganization and merging consumer banking into a wealth management unit. By focusing on FinTech market products rather than seeking out more consumers on a massive scale, Goldman Sachs can strengthen its wealth management channels and drive consumer growth in banking.

Instead of spending a significant amount of money on marketing to acquire new consumers from key competitor banks, Goldman Sachs will now focus on existing high-income and valued consumers.

When it comes to brand stretching, it doesn’t matter how good the idea is – it’s about assessing whether or not it would work with your brand image and render the expected benefits. You can look at potential brand stretch benefits through the lens of the company’s core business offerings.


Market analysts believe that Goldman Sachs pivot away from large-scale digital banking was a wise decision. In a broad sense, the reassessment of their product Marcus, was the result of Goldman Sachs misjudging their ability to win over the consumer banking market and not creating a more narrow plan when decicing to expand their product offerings. Goldman Sachs can still be successful in consumer banking, as they have refined their strategy and started to make slow and steady steps towards a product offering that makes sense for their existing customers as well as new customers.

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