Wall Street giant Goldman Sachs’ (GS) new online consumer lending arm called“Marcus: By Goldman Sachs,” which debuted last October, has given out more than $1 billion in loans to Main Street.
“We are absolutely delighted to get to the billion dollars. I think it’s more important that we are delighted as to how we got here,” Harit Talwar, head of Digital Finance at Goldman told Yahoo Finance in a telephone interview on Tuesday.
Part of that success, according to Talwar, has been the customer experience. Talwar touted that an actual person answers the phone in their Salt Lake City center in 10 seconds or less. (This reporter tested this out and it appears to be an accurate statement.)
“We learned that even though everything is digital, people still want the ability to talk on the phone. They want to do an application over the phone, not just digitally,” Talwar said.
The idea behind Marcus is to provide an alternative to higher-interest-rate credit card debt. According to the New York Fed, there’s approximately $764 billion in outstanding credit card debt in the U.S., and recent data show delinquency rates deteriorated during the first three months of the year. It’s a problem thousands of Marcus’ customers experience.
“The broader macro economic meaning, if at all — and I’m not an economist — is that consumers are really worried about their credit card debt,” Talwar said. “And they are becoming increasingly worried about their credit card debt with the Federal Reserve raising rates.”
What Marcus has found is that consumers are particularly concerned about their variable APRs.
“Most of these banks that are increasing the rates automatically are not increasing the rates on the savings, so the consumer concern is around their credit card debt. Even though the consumer is more healthy and the economy is doing better because of the variable nature of credit card rates rates consumers are concerned.”
Responsible lending
Named after one of the bank’s original business partners, Marcus Goldman—who started the firm 147 years ago with Samuel Sachs—the retail platform allows credit-worthy borrowers to apply for fixed-rate, no-fee loans of up to $30,000 for periods of two to six years.
Talwar said that they’ve also concentrated on being a responsible lender with a focus on peoples’ ability to pay off their debt.
“We don’t want to put them into debt which they aren’t able to service,” Talwar said. “Therefore, we’ve had prudent standards for credit.”
Talwar said they found that the average FICO score on their loans is far higher than what they were expected it to be. Talwar didn’t share the number, but credit-worthy customers would typically be those with a FICO score over 660.