Goldman Sachs Might Be Partnering With Amazon To Offer SME-specific Loans

• The banking giant Goldman Sachs is reportedly in the final stages of discussion with Amazon to develop a collaborative lending service for small and medium enterprises.
• The bank has already made a commitment to expand its consumer network in the country by offering more consumer-focused services.
• Recently, the bank partnered with Apple to co-launch the Apple Card.

Goldman Sachs seems to be increasing its focus on fintech. The Wall Street giant is currently in the mature stages of discussion with Amazon in a bid to collaborate and provide loans to small businesses in the US. If successful, this would bring Goldman Sachs into the realm of conventional financial services.

According to reports, technology to facilitate this loan provision to SMEs is already under development at Goldman, which would leverage the lending platform by Amazon. The outcome of the project would be financial products that are likely to be cobranded by both Goldman and Amazon. Reportedly, the project is expected to launch in the month of March this year.

This new development is in line with the promise made last week by David Solomon, the CEO of Goldman, with shareholders, that the bank would be focusing on increasing its returns by expanding into new segments such as consumer banking as well as wealth management.

Goldman had already signed an agreement with Apple to launch the Apple Card, a credit card, last year. The card and the marketing efforts made for it featured Goldman’s branding alongside Apple’s, enabling Goldman to expand its consumer market and reach over 100 million subscribers of Apple in the US.

Amazon’s existing small business lending operation is already worth over $863 million, as reported on the company’s balance sheet at the end of the last fiscal year. The e-commerce giant has been lending for the past 8 years now, with most of its borrowers being sellers on its own platform. Since Amazon already maintains a record for its sellers, approving small loans for them is usually a quick process that makes it an ideal credit lending option for SMEs.

However, the e-tech giant has not experienced phenomenal growth in its credit business, at least in the past few years. That is why it has partnered with banks in some markets around the world to deliver its financial services. According to experts, such partnerships have allowed Amazon to navigate through different regulatory requirements in multiple markets with ease.

As for Goldman, such partnerships, if successful, could mean exponential growth for its own consumer division. The company wishes to leverage technology by partnering with existing tech firms (like it has done with Apple Card), a move that can enable it to reach out to millions of new customers by making a fraction of the marketing investment that is usually made by retail banks.