Five years ago, when Goldman made a historic pivot away from its prop and flow trading, investment banking and central banker incubating bread and butter, and into a consumer digital deposit and lending platform via “Marcus”, it prompted a lot of raised eyebrows across Wall Street and at Goldman Sachs itself, where the strategy shift “was initially met with cynicism from some of Goldman’s own investment bankers, who openly derided it.”
Yet despite the snickers that Goldman was becoming a subprime lender to offset its declining capital markets dominance, Marcus plowed ahead with new offerings and partnerships, and got a lift from the industry’s deposit windfall this year. According to Bloomberg, it is on the cusp of generating $1 billion in annual revenue (which remains a small fraction of the bank’s tally of roughly $40 billion.
Yet not everything appears to be going to plan at 200 West Street, because as Bloomberg reports, the banker who was instrumental in spawning and helping guide Goldman’s tentacular embrace of Main Street is giving up his post in a management shuffle at the consumer unit.
Harit Talwar, who Bloomberg describes as “the face of Goldman’s five-year-old dive into mom-and-pop banking” is leaving the investment bank and Omer Ismail will take over as the new global consumer head.
Talwar joined Goldman in 2015, when former CEO Lloyd Blankfein first sketched out his plans for a new consumer-facing business line which now include an Apple co-branded credit card, a “high yield” deposit account (which pays a whopping 0.60% in interest), and a consumer lending division, all under the Marcus umbrella. The 59-year-old Talwar previously headed the US cards division for Discover Financial and spent 15 years at Citigroup with roles tied to cards, loans and retail banking.
According to Bloomberg, he had to be coaxed into joining the Wall Street titan, initially unsure of Goldman’s commitment to a strategy pivot. He probably regrets his decision in retrospect.
That said, Marcus continues to grow, albeit slowly (taking market share from other banks has proven difficult), which begs the question what may have prompted his departure? One possible answer is that Talwar pitched the online offering as a “lovable teddy bear,” in contrast to the “vampire squid” moniker the firm got stuck with courtesy of Matt Taibbi immediately following the financial crisis.
Under Talwar, Goldman tried to develop a reputation for its consumer business distinct from the one earned by its traditional dealings in high finance which are – shall we say – unsavory, including using a brand that tries to remove the Goldman association (the Marcus name was a nod to Marcus Goldman, a German immigrant who founded the firm in 1869).
Joking aside, what may have done Talwar in appears to be the oldest reason in the book: egos. As Bloomberg notes, some executives expected the consumer business to grow as a separate division that would express Goldman’s devotion to what it called a startup inside a 150-year-old firm. “But CEO David Solomon sprung a surprise on the operation earlier this year when he folded the consumer unit into the group that also includes wealth and asset management, clipping its standing as an independent business line.”