Goldman Sachs, one of the largest investment banks in the world, is planning to stop offering personal loans through its online bank Marcus by Goldman Sachs.

RB.ru writes that the online bank began offering unsecured personal loans in 2016, but it has struggled to gain enough traction among consumers.

Marcus by Goldman Sachs is an online retail bank that offered unsecured personal loans and a high-yield savings account. In 2016 Goldman Sachs began promoting the service through direct email and online advertising. Previously, the investment giant acquired a deposit platform and developed a system for providing unsecured consumer loans.

Goldman Sachs soon bought credit card issuing startup Final, as well as Clarity Money, a personal finance app. However, the components of the product could not be linked together, and the complexity of the technology platform increased drastically.

Now Goldman Sachs is cutting up to 400 positions from its loss-making retail banking operations and is planning to stop originating new personal loans in the coming months. Marcus will continue to offer savings accounts as well as expand its customer base and attract deposits.

Goldman Sachs is not the only failed neobank. The sector as a whole is experiencing difficulties: by some estimates, only 5% of the 400 neobanks around the world are profitable. It is quite difficult for them to attract customers, and even more difficult to convince them to use the service as their main one.

Interbank fees for debit card transactions offered neobanks the opportunity to generate revenue from day one. However, this will not satisfy the needs of investors in the long run. Services that target low-income communities may struggle to develop and scale lending offerings.

At the same time, new generation companies, such as Block’s mobile payment service Cash App, learned to build relationships with consumers through transactions. And BNPL platforms such as Affirm and Klarna have successfully expanded from high-value goods to everyday purchases while strengthening their connection with consumers.

Marcus shareholders have made it clear that the time of the neobank has come to an end. How long will it take before Silicon Valley stakeholders join them?

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