Goldman Sachs (NYSE:GS) , the most respected investment bank in the world, is continuing its retreat from retail Fintech services as it revealed this week that Marcus Invest, its Fintech wealth management platform, would be shuttered and services picked up by Betterment, a registered investment adviser. Goldman explained that Marcus has “decided to focus on our savings and CD products.” Terms of the deal were not disclosed.
Marcos Rosenberg, global head of Goldman Sachs Marcus, said they made the decision to transition away from the digital investment advisor offering:
“Betterment was the obvious choice for those accounts as we share a deep commitment to customer satisfaction. We look forward to continuing to serve our Marcus Deposits customers with great products and a great experience.”
Marcus, Goldman’s digital banking service, will continue to offer services for individuals—at least for the time being. Marcus currently serves more than three million customers globally and has consumer deposits of over $100 billion.
As posted on the Marcus website:
“Goldman Sachs & Co. LLC will no longer offer investment services via Marcus Invest, and current Marcus Invest accounts will be transferring to Betterment, unless customers opt out of the transfer. The transaction is expected to close in the second quarter of 2024. We’re no longer accepting applications for new investment accounts.”
Customers have been given until June 20, 2024, to opt out of the Betterment transfer. Robo-advisor Betterment reportedly has $45 billion in assets under management and more than 850,000 customers.
Goldman Sachs launched into the retail Fintech sector with Marcus and the expectation that it could leverage its institutional expertise on a digital platform to scale and serve the mass affluent.
Additionally, Goldman launched digital banking services in partnership with firms like Apple (NASDAQ:AAPL) to offer a unique credit card and savings account available on the iPhone. Apple has emerged as one of the largest Fintechs in the world. But this partnership may be going away as well.
Goldman’s retreat from consumer Fintech has been a drawn out process, fueled in part by failure and a dismal economy leading to poor results. Last October, Goldman announced it was selling digital lender GreenSky to a consortium led by Sixth Street.
After Goldman revealed its decision to exit GreenSky, an analyst during an earnings call asked management if the “consumer repositioning” meant the consumer banking business was “done and dusted.” Goldman described it as a “narrowing focus.”
It is obvious the narrowing continues.
While Goldman has dabbled in the digital asset sector and appears interested in this innovation, it has yet to make a significant commitment. In 2022, Goldman announced a partnership with MSCI and Coin Metrics and launched datonomy, a classification system for the digital assets market. But that’s about it, for now.
In some respects, the retail Fintech initiative was doomed from the beginning. Management’s big idea of leveraging their vast, global experience in financial services to digitally automate processes for a far wider audience beyond UHNW and institutional was spot on. But the culture at the bank was too much of a hurdle – this, combined with a stumbling economy, meant losses in the early stage endeavor garnered heightened scrutiny. From the early days of the launch of Marcus, chatter appeared to indicate the startup/money-losing initiative was struggling within the old-school investment bank environment. As early executives exited the Fintech project, Goldman tempered concerns departures were emblematic of deeper problems. In the end, they were.
As for Goldman CEO David Solomon, he knew that reversing his retail Fintech ventures would help secure his job. Not too long ago, there were rumors he was on the chopping block, but with the focus returned to Goldman’s wheelhouse services and decent earnings, these rumblings are no more.
