Can Goldman Sachs Marcus Disrupt the Banking Industry Like Amazon and Apple?
While the aim of Goldman Sachs' Marcus division to transform online banking is ambitious, I'm skeptical about whether it can achieve the same level of disruptive impact seen from giants like Amazon in cloud computing or Apple in music distribution.
The Promise of Innovation
Goldman Sachs and other financial institutions have long been setting their sights on digital transformation. The promise is to bring traditional banking services to the convenience of the living room, offering customers a digital-first experience. Goldman Sachs’ Marcus division seeks to be the leader in online banking, but the early signs are disappointing.
Comparisons and Context
One of the most successful transformations in recent history was Amazon's disruption of cloud computing. Amazon brought a new and innovative approach to the market, fundamentally changing the way businesses store and process data. Meanwhile, Apple's revolution in music distribution shifted the paradigm, making it easier and more accessible for consumers to enjoy music without the need for physical storage.
Goldman Sachs Marcus: A Step Back?
Goldman Sachs Marcus is promising online banking, but the question remains: Is it truly innovative, can it change the game as Amazon and Apple did? If we look at the current state of Marcus, it seems more akin to a step back. The best online bank now is USAA, a leader due to its minimalist focus on online services. Marcus, in contrast, is a far cry from USAA's simplicity and effectiveness.
The Core Offering of Marcus
Currently, Marcus offers a place to put your cash risk-free. While it's true that Marcus does offer better rates than many traditional banks, the product is limited. For those looking for riskier higher returns, they can still turn to traditional brokerage services. The spread between the Fed rate and typical savings rates seems to have been lowered, but this is not disruptive—it's necessary and overdue.
The Barrier to True Innovation
The barriers to entry for the banking industry are significantly higher compared to those in cloud computing or music distribution. Banks operate under a much stricter regulatory environment and must regain public trust after years of turmoil. Moreover, the capital requirements for a full-fledged bank are substantial, making it challenging for new players to enter without significant backing from established financial institutions.
Conclusion: A Sceptical Outlook
While Goldman Sachs Marcus aims to bring innovation to online banking, it seems that the hurdles to achieving the same level of disruption as Amazon or Apple are significant. The core services offered by Marcus, while high-quality, fall short of the pioneering changes that saw Amazon and Apple redefine their respective industries.
Time will tell, but it seems unlikely that Goldman Sachs Marcus will be the game-changer in electronic banking that some anticipate.