Amid the targets for return on equity in the investment banking business, Goldman’s first Investor Day in the wake of a revamped operating structure placed special emphasis on the digital realm.
Specifically, digital banking services, delivered to a broader consumer base through mobile means.
In a presentation as part of Goldman’s Investor Day, Eric Lane, global co-head of the Consumer and Investment Management Division, said the company will debut a digital wealth management offering later in 2020, and digital checking accounts will come to market in 2021.
Lane said the rollouts will “build out the balance” of digital banking offerings, where the retail branch experience is available via the phone.
The targets include doubling consumer deposits from the current $60 billion to around $125 billion within the next five years. The company will also target loan and card balance growth to reach $20 billion, from the current $7 billion, within five years. Goldman has said that offer presentment/approval rates stand at between 25 percent to 30 percent.
In supplemental materials released by the company in tandem with the presentation on consumer and wealth management, the consumer segment is estimated to be a $13 trillion market with $3.5 trillion in investable assets/deposits.
Total deposits, as measured across both the wealth management and consumer segments, have grown from $35 billion in 2014 to $116 billion last year (including the $60 billion in Marcus). Customer accounts for the consumer business total more than five million, the company has estimated.
In a separate panel presentation, Marco Argenti, co-chief information officer, and Stephanie Cohen, chief strategy officer, said that the embrace of the platform model, along with partnerships with other firms, helped lead to the creation of the Apple Card. The platform approach will also enable Goldman to externalize banking as a service efforts (similar to how Amazon, through Amazon Web Services, offers IT infrastructure to businesses).
Cohen emphasized a multi-pronged technology strategy that incorporates build/buy/investment and partnership activities. Argenti said that developers are “first-class citizens” across offerings like Marcus and GS Marquee (focused on institutional clients), as Goldman is able to embed APIs into its client workflow.
Later, in a question-and-answer session, CEO David Solomon was asked how Goldman’s digital banking efforts would compete with the likes of JPMorgan and Wells Fargo.
Solomon noted that Goldman’s peers and competitors hold roughly 50 percent of consumer banking – “and they will continue to have 50 percent.” He stated that about 4,000 other financial firms vie for the other 50 percent of the consumer banking business, a field where Solomon said “we are looking to take share” through an integrated suite of banking services, digitally available “in the palm of your hand.”
As Solomon told the audience at Investor Day, if those efforts prove successful, “we can have a nice business.”
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