This morning Goldman Sachs has announced plans to acquire B2B2C lender GreenSky in a deal worth $ 2.24 billion. The acquisition, which is still subject to regulatory approval and is expected to close in Q4 2020 or Q1 2021, is well positioned to strengthen the company’s consumer business and deliver new products and ways. to attract consumers to its Marcus by The Goldman Sachs financial products brand.
Goldman launched Marcus five years ago as a consumer-focused brand, in part to compete with a growing set of fintech startups, neobanks, and online trading platforms that have sprung up over the past decade. Although it has attracted 8 million users since its launch – putting it ahead of many so-called challenger banks – Marcus still follows Chime and Robinhood among banking and business applications (at least among the number of users).
But with the purchase of GreenSky, he hopes to add another way to draw consumers into his Marcus funnel.
GreenSky operates a platform that facilitates loans for big ticket items such as home improvement projects or elective dental or medical procedures. It enables brands like The Home Depot, as well as medical and dental practices, to offer installment loans to customers at the point of sale, thereby increasing sales and conversions for its customers. GreenSky then sells these loans to a number of banks and other lending partners.
The deal could be seen as a way for Goldman to break into the “buy now, pay later” trend, giving Marcus users additional ways to finance their purchases. This market has taken off recently, as evidenced by Square’s acquisition of Afterpay, PayPal’s acquisition of Paydy, and Amazon’s deal to offer BNPL funding through Affirm.
But according to Stephanie Cohen, Global Co-Head of Consumer & Wealth Management at Goldman Sachs, the acquisition is as much about integrating GreenSky clients into the Marcus ecosystem. She also believes that by bringing GreenSky into Goldman Sachs and lending its balance sheet, there is no limit to the scale to which it can grow.
That said, don’t expect Goldman or Marcus to start offering BNPL loans for everyday purchases anytime soon, as Cohen says GreenSky is attractive in part due to the expensive nature of home improvement loans.
To learn more about the company’s plans, we spoke with Cohen about the deal and asked how GreenSky fits in with Marcus and the rest of Goldman’s business. The full interview, slightly edited for length and clarity, is below.