NEW YORK–Wall Street firm Goldman Sachs is reportedly planning to introduce a consumer lending unit.
The New York Times reported that Goldman Sachs is in the early planning stages of an “ambitious” plan to offer loans of as little as a few thousand dollars to ordinary Americans. The new lending operation will be a virtual operation and accessed online or though an app, according to early reports. Plans call for the bank to be making the loans by early 2016, the Times reported.
Not everyone is convinced that the venture will be a success for Goldman Sachs, long a provider of exclusive commercial banking services to the wealthy.
“Everything Goldman has done in the last 30 to 40 years has all been focused on the commercial side, or things that abut it very closely,” Chris Kotowski, a bank analyst with Oppenheimer & Company, told The New York Times. “I refuse to believe that hiring a couple of programmers and offering to make $15,000 loans online is a highly value-added banking strategy.”
The Times analysis suggested that the bank may find a market, however. “The $840-billion consumer loan business is facing a shake-up as online upstarts like Lending Club, Prosper and even PayPal have begun offering small loans,” the Times reported. “These outsiders have captured only a tiny slice of the market so far. But with their low overhead, they are convincing some analysts that they will be able to eat away at the businesses of old-school banks with the legacy costs of branches and tellers.”