Rarely-humbled Goldman Sachs concedes missteps in plan to take on megabanks in retail finance

cnbc.com:

In this article

Goldman Sachs CEO David Solomon is reining in his ambition to make the 153-year-old investment bank a major player in U.S. consumer banking.

After product delays, executive turnover, branding confusion, regulatory missteps and deepening financial losses, Solomon on Tuesday said the firm was pivoting away from its previous strategy of building a full-scale digital bank.

Now, rather than «seeking to acquire customers on a mass scale» for the business, Goldman will instead focus on the Marcus customers it already has, while aiming to market fintech products through the bank's workplace and wealth management channels, Solomon said.

The moment is a humbling one for Solomon, who seized on the possibilities within the nascent consumer business after becoming CEO four years ago.

Goldman started Marcus in 2016, named after one of the bank's cofounders, to help it diversify revenue away from the bank's core trading and advisory operations. Big retail banks including JPMorgan Chase and Bank of America enjoy higher valuations than Wall Street-centric Goldman.

Instead, after disclosing the strategic shift and his third corporate reorganization as CEO, Solomon was forced to admit missteps Tuesday during an hour-plus long conference call as analysts, one after another, peppered him with critical questions.

It began with Autonomous analyst Christian Bolu, who pointed out that other new entrants including fintech startup Chime and Block's Cash App have broken through while Goldman hasn't.

«One could argue that there's been some execution challenges for Goldman in consumer; you've had multiple leadership changes,» Bolu stated. «Looking back over time, what lessons have you guys learned?»

Another analyst, Brennan Hawken of