Goldman executives clashed over consumer bank before retail retreat

Goldman Sachs’s decision this week to pull back from retail banking followed disagreements over strategy that in one instance pitted chief executive David Solomon against his subordinates, people familiar with the matter said.

Solomon had high hopes for Goldman’s Marcus-branded consumer project, which started in 2015 under his predecessor, Lloyd Blankfein. Solomon, who became chief executive in 2018, viewed the operation as a fintech in the making that could provide the Wall Street bank with the kind of steady revenues that many analysts say it needs to boost its stock market valuation.

But it failed to turn a profit and investor unease with the project prompted Solomon’s move on Tuesday to scale back the ambitions for Marcus and split it in two.

Solomon had argued that to build deeper relationships with consumers Marcus should offer current, or checking, accounts in addition to savings products and loans. When executives at Goldman’s consumer division argued that it did not have a competitive advantage in checking, Solomon disagreed.

Goldman announced in January 2020 that it would offer a checking account for Marcus by 2021, but the project fell short of its target date and has not been made widely available to retail customers.

“[Solomon’s] view was that . . . if we want to be the digital bank of the future and have tens of millions of customers on the Marcus platform, how could we not have a primary checking relationship with those customers?” one of the people familiar with the matter said.

Goldman declined to comment.

The project was made more costly because Goldman’s technology team opted to build from scratch a new cloud platform for the checking product, quashing a request by the consumer division to rely on technology the bank used for its Apple Card product, the people said.

In the process, the ill-fated Marcus checking-account push has become a symbol of one of Goldman’s biggest business reversals, with the Wall Street firm pouring billions of dollars into the Main Street banking business.

Marcus did manage to attract more than $100bn in deposits, providing Goldman with cheap funding. It also generated $1.5bn in revenues last year.

Under the restructuring announced on Tuesday, consumer banking will be subsumed within Goldman’s wealth management business. Meanwhile, a new “platform solutions” business will include Goldman’s credit card partnerships with companies such as Apple and General Motors and an online lending business, called GreenSky, acquired this year.

The disagreements over strategic direction that broke out over the eight years of the Marcus product came as Goldman cycled through three different consumer banking heads, moving from executives with experience in retail finance to its own bankers and tech engineers.

Blankfein’s first hire at Marcus was Harit Talwar, the former US cards boss at Discover who went on to staff the business with other consumer banking veterans. Talwar left Goldman last year and Peeyush Nahar was recruited last year to run the consumer business day to day. Nahar comes from a technology background with prior stints at Uber and Amazon.

Nahar reported to Stephanie Cohen, who came from an investment banking background before Solomon promoted her in 2021 to be co-head of the soon-to-be-bygone consumer and wealth management division.

In Solomon’s reshuffle this week, Cohen, who also led strategy for Goldman and was a champion of the GreenSky deal, according to people familiar with the matter, will run the new platform solutions business. Nahar will become a co-chief operating officer.