Now five years into its Marcus retail digital bank offering, Goldman Sachs saw 17% year-over-year net revenue growth in the third quarter in the consumer segment, thanks to higher credit card and deposit balances.

“Year over year, revenues in consumer are up 23% in the deposit line; they’re up 54% in credit cards,” Chief Financial Officer Stephen Scherr said last week during Goldman’s third-quarter earnings call. “And that’s just a reflection of the renewed commitment … to growing out that business and seeing it perform.”

The $1.39 trillion Goldman Sachs launched Marcus in 2016, offering savings accounts and personal loans to affluent, high-FICO users, and added a mobile app in early 2020. The bank has been building out the Marcus platform and is now looking to continue that expansion with its recent acquisition of GreenSky, which offers payment plans to customers for home improvements and other purchases.

“We’ve talked publicly about adding digital checking to the [Marcus] portfolio during 2022, and that is on track and it’s expanding,” Chairman and Chief Executive Officer David Solomon said on the earnings call.

‘Long-term’ approach

Solomon emphasized that the bank is focusing on Marcus “over the long term,” and praised the platform’s progress to date.

“In five years, we built a very, very significant depository institution with over $100 billion of digital deposits, no branches, very small marketing budget and customer acquisition costs,” he said. “The cost of the infrastructure that holds and drives those deposits is very, very efficient.

“We have 9 million customers that we’re servicing right now,” Solomon added. “We have our own credit card platform that I think is really differentiated, and we’re onboarding other partnerships but also have the opportunity for a proprietary card that’s in development.”

While some digital banking fintechs may focus on a revenue growth model, Solomon said Goldman Sachs wants to build “a sustainable business” with Marcus that contributes consistently to earnings, “and to compound that.”

“And we do believe that if we serve clients well in a seamless way with good technology, it will continue to grow,” he said.

Scherr noted that while Marcus went through “a more challenging period” during the pandemic, the bank is renewing its attention to the business, having seen the Marcus portfolio perform well.

A broader platform of services

“What’s coming into focus is a big, broad platform that can serve customers in all of their needs, as opposed to where we began in kind of a bespoke product set,” Scherr said. “And I think we’re at a key moment now with the acquisition of GreenSky to sort of take that forward.”

The bank agreed last month to acquire Atlanta-based GreenSky for $2.24 billion, and the fintech’s cloud-native technology platform will allow Goldman “to connect to a very attractive base of customers that we can pull into the market’s ecosystem,” Solomon said. GreenSky’s network of more than 10,000 merchants ― to whom it offers point-of-sale purchase options ― would likely have taken the bank a decade to develop, he noted.

“It allowed us to do something that fits seamlessly into our platform and allowed us to expand the point-of-sale activities that we were doing,” said Solomon. “We feel very, very good about it, and we think that this acquisition will consistently deliver 20%-plus returns on the activity that it generates.”

Goldman Sachs reported net revenue of $13.61 billion and net earnings of $5.38 billion for Q3, up 26% and 49%, respectively, from net revenue of $10.78 billion and net earnings of $3.62 billion for Q3 2020. In the consumer segment, the bank reported net revenue of $382 million for Q3, up from $326 million a year ago. Overall communications and technology expenses were $397 million for Q3, up 17% from $340 million YoY.

Goldman Sachs [NYSE: GS] shares closed at $412.16 at 4:08 p.m. today, down 0.38% from market open.