For Adam Dell, Marcus—Goldman Sachs’s consumer banking platform—is better equipped than most to deal with the banking industry’s new, post-COVID-19 normal.
“There’s been a profound acceleration in the adoption of digital [banking] tools by consumers,” Dell, head of digital product management at Marcus, told Fortune on Wednesday in the wake of Goldman Sachs’s impressive second-quarter earnings report. “There’s a large segment of the population that has shifted from, ‘I want to go into a branch to be able to see my money,’ to, ‘Wait a minute—I think it’s better if I do this in a digital fashion.’”
That’s exactly the shift that Marcus is looking to address, given its branchless, online-only approach to consumer banking. Since launching nearly four years ago as investment banking giant Goldman’s foray into the consumer market, Marcus has grown its footprint with an array of product rollouts and acquisitions. Those include products like no-fee personal loans, savings accounts with comparatively high yields, as well as its 2018 purchase of personal finance startup Clarity Money—which Dell (the brother of Dell Technologies founder and CEO Michael Dell) founded and where he served as CEO before moving to Marcus as part of the acquisition.
So far, the approach appears to be reaping dividends. Goldman reported earnings on Wednesday that far exceeded expectations, despite a terrible second quarter at large for a U.S. economy that’s been devastated by the coronavirus pandemic. While Goldman’s continued reliance on investment banking and securities trading activities undoubtedly gave it a lift, there was good news on the consumer front as well; revenues in its consumer and wealth management division were up 9% year over year, to $1.36 billion, while consumer banking revenues alone were up 19%.
Marcus has now raised $92 billion in deposits to date, according to Goldman, with $32 billion of that raised in the first half of 2020 and $20 billion raised in the second quarter alone. For Dell, that reflects the bank’s commitment to “a world where consumers can do anything they want, vis-à-vis their money, on their mobile device”—particularly at a time when the pandemic has prompted many to question the viability of traditional, brick-and-mortar means of commerce.
“[Marcus] is well positioned because we don’t have a branch network to support,” he notes. “We think there’s 100 basis points (1%) of cost per individual customer tied up in branch networks, and we can eliminate that cost by delivering our service to consumers in a digital fashion…Consumers now recognize that they can deposit a check, pay a bill, manage their finances with their phone.”
Of course, Marcus is not immune from the macroeconomic headwinds now impacting the banking sector and the economy at large. Like many of its competitors, Goldman has slashed the interest rate on its “high yield” savings account to factor for a lower-rate environment—cutting it down from more than 2% last summer to just over 1% today.
But Dell says that hasn’t stopped customers from flocking to savings products in the wake of the pandemic, as difficult economic conditions have prompted many to “appreciate the importance of having savings for situations like this.”
“I think the most relevant metric is our savings rate relative to the other options that consumers have across the market,” says Dell. “What you’ll find is that we’re still quite high relative to our competitors. It’s our aspiration to be among the top high-interest-rate account providers to the market.”
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