Goldman Sachs just hired a new partner to help bring it into the digital age.
Harit Talwar, who recently left his post as head of card services at Discover after 15 years, will be leading a new effort for the bank to lend money to consumers and small businesses over the Internet, according to a memo sent to staff Monday (May 4) from CEO Lloyd Blankfein and COO Gary Cohn and reviewed by Quartz.
Goldman’s embrace of online lending follows the incredibly fast growth of startups like LendingClub and Prosper, which are attracting money from Wall Street and aim to make more loans available to more people over the Web.
But unlike the LendingClub marketplace model, Goldman will make loans directly. It’s also a way for Goldman to expand its banking business without going to the trouble of opening up actual branches.
“The traditional means by which financial services are delivered to consumers and small businesses is being fundamentally re-shaped by advances in technology, maturity of digital channels, use of data and analytics, and a focus on customer experience,” Blankfein and Cohn said in the memo.
While Goldman is best known for trading and corporate dealmaking through its investment bank, it also operates a more plain vanilla bank that is chartered in New York state and holds on to federally-insured deposits.
Goldman ramped up its banking operations (paywall) after it became a bank-holding company in the wake of the 2008 financial crisis. To date, the bank has mostly made loans to big institutions and private wealth clients. Now, it wants to start lending to consumers and small businesses via the Web.
It has no plans to operate physical branches so it can operate “without the burdens of legacy costs and fixed infrastructure,” the memo said.