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The rise of digital banking — and specifically, consumer lending — looks set for renewed focus from regulators.
As reported last week, the Federal Reserve has been looking into Goldman Sachs’ oversight of its consumer business Marcus, its management and governance and its handling of customers’ problems.
The details are scarce at the moment — notably, what exactly is being examined.
In response to a PYMNTS inquiry last week, when reached for comment, a spokesperson for Goldman Sachs told PYMNTS via email, “As we told The Wall Street Journal, the Federal Reserve is our primary federal bank regulator and we do not comment on the accuracy or inaccuracy of matters relating to discussions with them.”
And, reached by PYMNTS on Monday (Jan. 23), a spokesperson for the Federal Reserve said that the bank would have no comment on the Goldman matter, or oversight of similar, consumer-facing operations at larger banks.
PYMNTS noted that investigations are not tantamount to wrongdoing. But consumer lending — and the digital channels to do so at banks and non-banks — remains in growth mode. The Goldman investigation, and the fact that it is focusing on the digital-only Marcus, speaks to the complexities of building out platforms and digital-only efforts (and no, we’re not focusing on crypto here).
Goldman, for its part, reported that it had $6 billion in installment loans on the books in the fourth quarter ending Dec. 31, up from $4 billion a year ago. Goldman also reported $16 billion in credit card loans, up from $8 billion in Q4 2021.
Mobile Shift Continues at the Big Banks
PYMNTS data has shown that use of digital channels at Goldman’s peers that have had relatively more entrenched consumer businesses have seen continued growth in consumers’ use of mobile and digital channels to get their banking done.
Bank of America stands out as a prime example. In its earnings presentation and commentary, the bank noted that digital “sales” made through the company’s online channels were up 22% year over year and now account for 49% of that activity. Separate PYMNTS data show that a significant majority of credit unions have been investing in digital innovations tied to personal loans.
In a signal that more oversight of banks could be in the offing, Acting Comptroller of the Currency Michael J. Hsu said in remarks at Brookings last week that, with a nod to the bigger banks, “there are limits to an organization’s manageability. Based on my experience as a bank supervisor and as Acting Comptroller of the Currency, I believe there is a growing body of evidence to support this premise.