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Goldman Sachs Bids for General Motors' Credit Card Business

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Continuing with the efforts to strengthen its consumer banking business, The Goldman Sachs Group (GS - Free Report) has placed a bid to invest in General Motors Co's (GM - Free Report) credit card unit, which is having about $3 billion in outstanding balances. The news was first reported by The Wall Street Journal.

At present, the work is being carried out by Capital One Financial (COF - Free Report) , who still has one year of contract term remaining. Notably, the article reported that General Motors don’t need to replace its current card issuer.

In the era of digitization, Goldman pitched to use cars as e-commerce portals, which will allow people to make payments for gas or buy groceries from the driving seat. Barclays (BCS - Free Report) is also one of the bidders for the world's largest automobile manufacturer’s credit card business.

Using the car’s dashboard screen to do transactions is not a new thing for General Motors, as the automaker made it possible in 2018 for its drivers to order food and perform other transactions with Dunkin’ Brands Group and Shell.

Goldman has been undertaking initiatives to counter falling revenues by entering new markets and diversifying income sources. Its digital consumer lending platform, Marcus by Goldman Sachs, launched in 2016, has been gaining momentum of late due to the change in consumer preference to digital modes of banking, especially during the pandemic.

Further, last year, in partnership with Apple and Mastercard, Marcus introduced its first-ever digital and physical credit card called the Apple Card. Notably, Goldman is mulling to roll out an AI assistant for its digital-only bank.

Though the coronavirus outbreak-induced concerns are expected to hamper business activities in the near term, Goldman’s solid position in worldwide announced and completed M&As will keep strengthening the business.

Shares of the company have lost 10.6% in the past six months compared with the 12.4% decline of the industry.

 

 

Goldman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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