Since the Great Recession, Goldman Sachs Group Inc. (NYSE: GS) has been regulated as a bank holding company. After all, the bank was a recipient of $10 billion of the notorious TARP bailout money that gave liquidity to the banks during the financial crisis. One small problem ahead of the bailouts was that Goldman Sachs did not, and had not in our lifetimes, actually operated as a retail bank.

Starting in 2016, there was a semi-quiet push for an online lending and deposit platform, which is now named Marcus, after Goldman Sachs had decided to acquire GE Capital’s online loan platform. This unit operates under Goldman Sachs and is a brand of Goldman Sachs Bank USA.

For about a decade now, it has been very hard for the public to think of Goldman Sachs as a bank holding company, even if it is classified as one. If it has no retail banking operations that deal with Joe Public, it doesn’t really feel like a bank. And if Goldman Sachs only deals with wealth management and financial services for wealthy individuals and institutions, it sure doesn’t feel like a real bank. But since Goldman Sachs received bank bailout money during the recession, it is now regulated in many ways similar to its rival bulge bracket investment banks, which also have retail banking operations with millions of retail customers. And maybe the technology shift to an online future makes many brick-and-mortar banking operations largely irrelevant.

The big issue here is whether the growth opportunity for Marcus as an online lending and deposit platform is potentially large enough that it could change the future image of Goldman Sachs. It is possible that Marcus by Goldman Sachs could become the online bank for Joe Public rather than just for Richie Rich. It is no secret that the firm’s nickname has been “Golden Slacks” for years.

Goldman Sachs already has said that it will grow Marcus in a manner that will still add to its shareholder returns. The company also acquired Clarity Money in 2018, with its community of more than 1,000,000 customers, and said that its app will remain 100% free to use. Goldman Sachs has even been advertising its Marcus effort through traditional advertising methods.

Marcus offers no-fee and fixed-rate loans from $3,500 to $40,000. As for the loan types, these are debt or credit card consolidation loans, online loans, unsecured loans and even home improvement loans. This might not be an issued Goldman Sachs credit card, but it’s certainly the “Online Retail Bank of Goldman Sachs.”

And on the deposit front, Marcus offers online savings accounts with a current 1.60% yield (likely to change as rates change) that is higher than most traditional banks. It has certificates of deposit (which most investors forgot about during the zero-rate environment) with current yields of 2.10% for 12 months, 2.20% for two years, 2.35% for three years and 2.75% for five years. Current Treasury yields are listed for a comparison as follows: 2.14% for one year, 2.39% for two years, 2.52% for three years and 2.68% for five years. Marcus says that clients only need a $500 minimum to open a CD and to earn stated annual percentage yield.

Getting detailed information on the internal results of Marcus has not been as easy as it is with traditional banks, because it is still a small unit within a financial giant. 24/7 Wall St. did get some information from the 2017 Goldman Sachs annual report, but admittedly this was ahead of its Clarity Money acquisition. The firm does not appear to be on track to open many brick-and-mortar branches like a traditional bank, as it is using technology solutions to meet client needs.

The Goldman Sachs annual report specifically said that it “is uniquely positioned to be a disruptor in consumer finance.” By the end of 2017, Marcus had originated $2.3 billion of personal loans since its launch. The company further said that it plans to build a resilient loan book and that it will remain deliberate in the pace of its growth. Marcus deposits grew by more than $5 billion in 2017, ending 2017 with $17.1 billion. That is nearly double the balances the bank started with when it entered the business in April 2016. As of the end of 2017, Marcus was serving more than 350,000 customers across loans and deposits, and the company went as far as to say that it has a “clear potential to build relationships with millions of consumers.”

JMP Securities has a Market Perform rating on Goldman Sachs, but the firm did speak about Marcus and new initiatives. The firm’s post-earnings report said additional capabilities and services being added into Marcus (and Clarity Money) could reasonably add in another $1 billion of related incremental revenue.

Looking at the most current earnings report, the entire revenue base of $10.04 billion in the first quarter of 2018 was up 25% from a year ago and up 28% sequentially. Goldman Sachs even said that the higher revenues from a year ago reflected higher net revenues across all segments. Its four listed segments are Investment Banking, Institutional Client Services, Investment Management, and Lending & Investing.

Goldman Sachs also said that operating expenses were $6.62 billion for the first quarter of 2018. That is 40% higher than in the fourth quarter of 2017. The ratio of compensation and benefits to net revenues for the first quarter of 2018 was 41.0%, which is unchanged from the first quarter of 2017. Goldman Sachs said that its total staff increased by 2% during the first quarter of 2018.

Where Goldman Sachs does address its “digital lending and deposit platform” that would pertain to Marcus was in non-compensation expenses. This portion of the income/expense statement was $2.50 billion for the first quarter of 2018, up 14% from a year ago but 3% lower than the fourth quarter of 2017. The Goldman Sachs earnings report said:

The increase compared with the first quarter of 2017 was largely driven by significantly higher brokerage, clearing, exchange and distribution fees, reflecting an increase in activity levels. In addition, expenses related to consolidated investments and the firm’s digital lending and deposit platform were higher, with the increases primarily included in market development expenses, depreciation and amortization expenses and other expenses. Technology expenses increased, reflecting higher expenses related to computing services and software depreciation. The increase in non-compensation expenses compared with the first quarter of 2017 included approximately $50 million related to the new revenue recognition standard.

Goldman Sachs already had and will continue to have a large balance sheet. The firm’s total assets were $974 billion as of March 31, 2018, up from $917 billion at the end of the fourth quarter of 2017 and from $862 billion at the end of 2016.

If you go back to April of 2016, when Goldman Sachs closed its acquisition of the online deposit platform of GE Capital Bank, its press release at the time indicated that it assumed approximately $16 billion worth of deposits. Goldman Sachs even stated at that time that the GE transaction increased the funding diversification and strengthened the liquidity profile of Goldman Sachs and what was then GS Bank.

Back in 2009, Goldman Sachs called itself a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base. The firm was founded in 1869, and its client base in 2009 included corporations, financial institutions, governments and high-net-worth individuals. If you noticed that something was missing here, it should be obvious — no retail banking operations and no services for Joe Public.

In June of 2009, Goldman Sachs repaid the Treasury’s $10 billion TARP investment, and it also said that the firm paid $318 million in preferred dividends during the eight months of the government investment. And just a month later the firm announced that the company redeemed the warrants the U.S. government received in connection with its investment in the firm through the TARP’s Capital Purchase Program at $1.1 billion. This was shown to be the full value the U.S. Treasury Department had determined. Even Warren Buffett invested $5 billion into Goldman Sachs in 2008, a move that may have generated an additional $3 billion return for Buffett and his shareholders.

It probably will be a few years before Goldman Sachs has a massive change in its perception by the general public. Yet, there are already hundreds of thousands of clients for Marcus, and the app purchase of Clarity Money just added more than a million users inside the platform.

If Goldman Sachs actually wants the Marcus brand to radically change its image, it seems like the firm might want to consider making an acquisition of other online banking companies. Then again, Goldman Sachs might want to keep the “Golden Slacks” image alive and well without as much financial exposure to the public.

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