Goldman Sachs has decided to go on the risky path. The press widely reported that the investing banking giant may start giving loans any Joes and Johannes by next year. The better returns from this type on investment cannot be obtained in short period. But this may reward the firm with new customers. The plan involves many risks and distractions and also very big strategic move.
As of now the investment bank has around $860 billion capital. The bank provides around $20,000 worth personal loans. Small and medium enterprise may be benefitted due to this new strategy. The positive signal by the United States economy will make these most profitable destinations for loans. The borrowers are eager to get money but lenders are not eager enough.
Credit card debt is huge market for the bank as it offers loans at lower rate for the same. If bank gets more aggressive it can access market as big as $400 billion. The massive size of credit card lending market has resulted in the formation of online lending companies like Affirm and Lending Club. The bank officials are eager to explore these profitable sectors.
Citigroup recently sold OneMain financial, the subprime lending firm to spring leaf Financial. One main created growth rate of 6.7 percent. This makes asset size seven times bigger than any big investment bank in the market. The cheaper and secure technology development for banks is lucrative business opportunity too. This can help in faster expansion and providing better access to services to customers.