Goldman’s BNPL Play Strengthens Consumer Financing, Targets Merchant Growth

Through the last few years, through the pandemic, especially, Wall Street behemoth Goldman Sachs has been ramping up its consumer banking efforts.

In the latest bid to do so, Goldman announced Wednesday (Sept. 15) that it is buying specialty lender GreenSky Inc. in a $2.2 billion all-stock deal.

See: Goldman Sachs to Buy FinTech Lender GreenSky in $2.24B All-Stock Deal

In terms of the acquired company’s focus, as noted in this space, GreenSky has funded home improvement borrowing options for about 4 million customers and has financed more than $30 billion of business improvements for the healthcare, retail and eCommerce industries. In this sense, then, we see the consumer focus evident in the ability to arrange loans for individuals and families who want to buy goods and services (home improvement, say, or cosmetic surgery) they might otherwise not be able to fund; by delivering a service that helps businesses grow (and allows them to offer financing), the B2B focus is here too, primarily by extending its lending through brick-and-mortar firms and individual contractors.

Goldman’s Marcus, for its own part, has built up its own operations, particularly in consumer deposits, and in investments. By bringing GreenSky into the fold, of course, this deal is but the latest in a string of buy now, pay later (BNPL) acquisitions.

The BNPL Wave 

GreenSky is part of the buy now, pay later wave of companies offering loans that let consumers spread out purchases over weeks or months, usually at lower interest rates than credit cards. Deal making in that sector has ramped up this year, with Afterpay Ltd. selling to Square Inc. for $29 billion and PayPal Holdings Inc. buying Japan’s Paidy Inc. for $2.7 billion. Those companies mostly finance online purchases, while GreenSky peddles its loans through brick-and-mortar merchants and home renovation contractors.

GreenSky said on its site that it has been developing a suite of new promotional loan products, including reduced rate and deferred interest loan products. In terms of the mechanics, the customer applies, upon approval they receive a GreenSky account number and loan agreement; the merchant is funded as the same consumers use their account numbers to pay the providers and the merchants can process payments like credit cards.

For Goldman, in materials presented on the company’s site in tandem with the merger announcement, the development of the merchant and consumer ecosystems, with an existing customer base of more than 8 million, will help scale digital consumer banking. It will also tap into a merchant network that totals more than 10,000 businesses.

Goldman’s purchase comes as PYMNTS found in recent research that the appeal of point-of-sale (POS) credit is broadening across demographics. The reasons are clear: roughly two-thirds of respondents said having the BNPL option in place gives them the ability to buy things they want without overspending.

Read here: New BNPL Study: Consumers At All Income Levels Using POS Credit To Manage Spend