Goldman Sachs, the storied investment bank, is taking a page out of the start-up script, rolling out a new consumer-facing unit that will leverage the internet to achieve lower prices:
While the new consumer lending unit is still in the early planning stages, Goldman has ambitious plans to offer loans of a few thousand dollars to ordinary Americans and compete with Main Street banks and other lenders.
The new unit will offer the loans through a website or an app — functioning like a virtual bank in one of the oldest companies on Wall Street. Without the costs of bank branches and tellers, Goldman can lend the money at lower interest rates while still making a profit. The company hopes to be ready to make its first loans next year, according to people briefed on its plans, who spoke on the condition of anonymity.
Your local bank branch loan officer may need to start looking for a new job, but for everyone else this is a heartening development. The Amazonization of finance is surely coming; other institutions will follow Goldman, and we will see some of the same consequences for retail banking that we saw with bookstores. (Though we sincerely doubt there will be as much nostalgia for the old timey bank branch as there is for the local book store.)
What also needs to happen is for these cheaper loans to start going to small business start-ups, and not just to consumers looking to consolidate debt or remodel their kitchen. In an age when industries are transforming and jobs are disappearing, America has no choice but to become a start-up nation itself. Cheaper credit is one of the ways that the emergence of a new wave of small business can be encouraged.