The launch of Marcus is especially noteworthy, given that the platform is a significant departure for a bank that has previously had effectively zero consumer banking presence. Hence, it comes as no surprise that everyone has mixed opinions on whether Marcus will sink or swim on its maiden voyage into marketplace lending.
That said, there are two things that could give Marcus a leg up on the competition. First, the platform is operating as a start-up, but inside of a banking powerhouse with deep pockets to dig into for loan origination activities. Unlike its competitors, Marcus has a wealthy father — that is, it does not have to beg for capital like some of its competitors.
Goldman Sachs is also no stranger to marketplace loan securitization and the underwriting of consumer credit risk, having been involved in previous ABS transactions from SoFi and Marlette Funding. This means that should it decide to tap the securitization market in the future, it will be less painful for Marcus than it has been for its upstart competitors which have had to navigate the pitfalls of first time issuance.
Second, Marcus has indicated that it will not charge origination or late fees to borrowers, which could be the platform’s biggest competitive edge over other lenders. Other added incentives include borrower flexibility to choose the day of the month when their payments are due, in addition to competitive interest rates of 5.99%-22.99%, which fall in the same range as Lending Club, Prosper and Marlette.
At the end of the day, the player with the lowest rates and most attractive perks wins, and it seems that Marcus is preparing to put up a fierce fight with established players to win borrowers' loyalty.
Still, the ability to scale is only half the fight. It remains to be seen if Marcus can capture customer loyalty on the same scale as SoFi, which offers perks and added benefits ranging from dating services to life insurance. According to the 2016 Harris Poll Reputation Quotient, the Goldman Sachs brand ranked last among financial services companies in terms of corporate reputation.
It is possible then that the Marcus brand will need more than just low rates and zero fees to attract consumers. This could mean funding an advertising and marketing push similar to other online lenders which have courted customers via aggressive ad campaigns across big US cities. But given Marcus’s well-capitalised parent, money should not be a problem.
Simply put, Marcus is just like meeting someone on Tinder – it has the looks and certainly a strong enough bio to warrant swiping right. But ultimately the first face-to-face will determine if US consumers are going to stick with Marcus in the long run.