A welcomed shakeup:Goldman also officially announced the news Major changes to the bank’s structureMarcus, its consumer banking unit, was unwinding. The restructuring will create three new divisions. Rumours have circulated over the last few weeks about a possible coup..
- The consumer-focused areas of Marcus will move into Goldman’s new Asset and Wealth Management business.
- Marcus’ corporate client business will form a new division called Platform Solutions. This division will also include Goldman’s installment lending business, GreenSkyAlong with its partnerships and agreements with Apple and General Motors.
- The bank will also combine its investment banking and trading operations to form its Global Banking & Markets division.
Goldman’s decision to back away from the digital, consumer-focused Marcus will be a relief to investors and shareholders, who questioned its viability as losses mounted and the bank’s share price fell. Marcus was an expensive investment that had to be made. The high-yield savings account interest proved unsustainable.
What to Watch: Marcus was cited as one of the major drivers behind Goldman’s falling profits over the past 12 months. With this reorganization, Goldman will need to rebuild its investors’ confidence and prove that it can recover from the billions of dollars in losses the digital bank generated. Here are some things you should be paying attention to:
- The new leadershipDavid Solomon will still be at Goldman Sachs’ helm, but each new division will see him. Fresh faces in leadership. They will be under immense pressure to complete this round of organizational transformations.
- Regulative scrutiny The breakdown of Marcus will not get regulators off Goldman’s back. Marcus’ loss-making operations continue to be analyzed by US agencies, and Goldman’s credit card business is still under investigation.
- Partnerships with enhanced partners: Apple recently extended its relationship with the bank by offering high-yielding loans Savings accounts. In the future, expect to see more such partnerships.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Get more practical takeaways sent straight to your inbox every day when you subscribe to our newsletter.
