This morning, Goldman Sachs announced plans to acquire B2B2C lender GreenSky in a $ 2.24 billion deal. The acquisition, which is still subject to regulatory approval and is expected to close in the fourth quarter of 2020 or the first quarter of 2021, is positioned to strengthen the company’s consumer business and offer new products and new ways to attract consumers to your Marcus. Goldman Sachs financial product brand.
Goldman launched Marcus five years ago as a consumer-focused brand, in part, to compete with a growing set of fintech, neobank, and e-commerce platforms that have emerged over the past decade. While it has attracted eight million users since its launch, placing it ahead of many of the so-called challenging banks, Marcus follows Chime and Robinhood among banking and commercial applications (at least among the number of users).
But with the purchase of GreenSky, he hopes to add another way to attract consumers to his Marcus conversation funnel.
GreenSky operates a platform that facilitates lending for high-paying items, such as home improvement projects or elective medical or dental procedures. It allows brands such as Home Depot, as well as medical and dental consultations, to offer installment loans to customers at the point of sale, thus increasing their customers ’sales and conversions. GreenSky sells these loans to various banks and other lending partners.
The deal could be seen as a way for Goldman to get into the “buy now, pay later” trend, offering Marcus users additional ways to fund their purchases. This market has taken off recently, as evidenced by the acquisition of Afterpay by Square, the acquisition of PayPal by Paidy and Amazon, which reached an agreement to offer financing to BNPL through Affirm.
But, according to Stephanie Cohen, global co-head of Consumer & Wealth Management at Goldman Sachs, the acquisition is both about introducing GreenSky customers to the Marcus ecosystem. He also believes that by putting GreenSky in Goldman Sachs and lending its balance sheet, there is no limit to the scale at which it can grow.
That said, don’t expect Goldman or Marcus to start offering BNPL loans for daily purchase anytime soon, as Cohen says GreenSky is attractive in part because of the important nature of home improvement loans.
To learn more about the firm’s plans, we spoke with Cohen about the deal and wondered how GreenSky fits in with Marcus and the rest of Goldman’s business. Below is the full interview, slightly edited for length and clarity.