Goldman Sachs thinks its new digital lending division, Marcus, has an advantage over established rivals. “Those have expensive branch networks and tellers while Goldman is strictly online. Meanwhile, online fintech upstarts such as Lending Club cannot match Goldman’s 10,000 engineers.” Indeed, Goldman Sachs’ new digital lending business is transforming the culture at the bank, according to COO Omer Ismail, who was tapped to devise a new consumer lending division from within the private equity division. According to Mr Ismail, the new brand is bringing a relaxed atmosphere to the famously disciplined organisation. “You know, our chief architect has a nose ring,” said Mr Ismail. “We write on everything, we write on our walls, we write on our tables, we write on our windows, again, that’s very new.” It sounds uncannily like every startup ever, short of the powernap pods and pool tables. But Goldman doesn’t just do things by half. You can listen to the interview with Mr Ismail in a Lendacademy.com podcast.
In any case, Goldman has acquired customers for its Marcus division throught mailouts and by buying out a division of GE Capital. However, Goldman’s engineering and database will pale in comparison to that of Amazon. It’s several years since Amazon quietly launched its merchant lending offer, which originated $1 billion in the last year alone, and Amazon is now going to expand that lending to two million customers on its marketplace platform. “The move is also a sign of a broad shift of power away from the big bricks-and-mortar banks — which have pulled back from small-business lending under tougher post-crisis rules on capital — and from newer online challengers such as OnDeck and Kabbage, which have spent heavily on lead-generation and marketing to unearth creditworthy borrowers,” notes the FT. “Peeyush Nahar, vice-president of Amazon Marketplace, noted that most sellers used their loan proceeds to buy more stock and negotiate bulk discounts with suppliers. Losses so far had been ‘very, very small’, he said, without offering details.” Amazon says that it noticed many sellers found access to capital a problem. Holding its customers’ goods and surveying data about its customers’ delivery and customer service metrics, Amazon and its algorithms are well-placed to monitor lending and spending. It’s an area that’s also drawn interest from Square, PayPal and their European counterparts.
In the latest episode of HBO’s Silicon Valley, the resident engineers at compression company Pied Piper devote their time to hacking a new smart fridge brought into the house/office by Jin Yang. With impeccable timing, along comes Mastercard CEO Ajay Banga to explain precisely why you should get worried if your fridge starts talking to your toaster. “Now, there is no reason why a stupid refrigerator [should] talk to your toaster, so if it does, you should know, that that’s a mistake and something is wrong and somebody’s hacked into it,” Mr Banga says. “Your refrigerator should be talking to Fresh Direct. If it starts talking to your toaster, you got a problem, or you don’t even know how to find that today.” The straight-talking Mr Banga, who must alarm communications teams used to bland non-utterances, has previously openly warned competitors about trifling with Mastercard’s business, particularly when it comes to wallets. (Incidentally, Mr Banga wants MasterPass to be a kind of wallet of wallets, a brand-agnostic open wallet.) But it’s the transformation to the digital infrastructure that fascinates him — even if he is just short of laughing openly at some of the visions suggested by our tech overlords, such as ordering a pizza in your car by voice over bluetooth. “The issue is, first of all, why would you want to do that, whether in your house or whether in the car? Secondly, just a small matter, hacking into your Bluetooth is the easiest thing in the world for a kid of 10 years old. And from their being into your car, to then be able to change the way in which your car accelerates and brakes is not hard . If you don’t believe me, Google the topic and you’ll find real facts on that.”
