“We are absolutely delighted to get to the billion dollars. I think it’s more important that we are delighted as to how we got here,” Harit Talwar, head of Digital Finance at Goldman told Yahoo Finance in a telephone interview on Tuesday.
Part of that success, according to Talwar, has been the customer experience. Talwar touted that an actual person answers the phone in their Salt Lake City center in 10 seconds or less. (This reporter tested this out and it appears to be an accurate statement.)
“We learned that even though everything is digital, people still want the ability to talk on the phone. They want to do an application over the phone, not just digitally,” Talwar said.
The idea behind Marcus is to provide an alternative to higher-interest-rate credit card debt. According to the New York Fed, there’s approximately $764 billion in outstanding credit card debt in the U.S., and recent data show delinquency rates deteriorated during the first three months of the year. It’s a problem thousands of Marcus’ customers experience.
“The broader macro economic meaning, if at all — and I’m not an economist — is that consumers are really worried about their credit card debt,” Talwar said. “And they are becoming increasingly worried about their credit card debt with the Federal Reserve raising rates.”
What Marcus has found is that consumers are particularly concerned about their variable APRs.
“Most of these banks that are increasing the rates automatically are not increasing the rates on the savings, so the consumer concern is around their credit card debt. Even though the consumer is more healthy and the economy is doing better because of the variable nature of credit card rates rates consumers are concerned.”
Named after one of the bank’s original business partners, Marcus Goldman—who started the firm 147 years ago with Samuel Sachs—the retail platform allows credit-worthy borrowers to apply for fixed-rate, no-fee loans of up to $30,000 for periods of two to six years.
Talwar said that they’ve also concentrated on being a responsible lender with a focus on peoples’ ability to pay off their debt.
“We don’t want to put them into debt which they aren’t able to service,” Talwar said. “Therefore, we’ve had prudent standards for credit.”
Talwar said they found that the average FICO score on their loans is far higher than what they were expected it to be. Talwar didn’t share the number, but credit-worthy customers would typically be those with a FICO score over 660.
Traditionally, Goldman’s clients have included corporations, financial institutions, governments, and high-net-worth individuals. During the 2008 financial crisis, Goldman was required to convert from a broker-dealer to a bank holding company to gain access to the Federal Reserve’s discount window, a source of liquidity. In that time, there were internal discussions on how to grow the consumer side of the business. Last year, the bank made the first move in that direction when Goldman’s GS Bank acquired GE Capital’s online deposit platform. Marcus is another one of the firm’s steps into the consumer-side.
Talwar, a former head of Discover Financial Services’ US credit-card business, joined Goldman as a partner in 2015 to help lead the firm’s online lending efforts.
During the building process, Goldman’s team spoke to 10,000 customers about their experiences. In those discussions, they found that consumers don’t like rates that keep changing. Most rates are variable, but Marcus’ are fixed. Goldman’s interest rates are 3% to 5% lower than what customers would pay for comparable credit card debt, according to Talwar.
Goldman also found that consumers hate fine print, especially when it comes to fees. Marcus has no origination fee and no penalty for pre-payment of the loan. Goldman also offers monthly payments and allows users to pick which day they’d like to schedule payments.
So far, the early customer reviews look promising. On Credit Karma, Marcus currently has 4.8 stars out of five and just over 100 unsolicited reviews.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.