Goldman Sachs and Amazon are about signing an agreement that would allow Amazon merchants to receive loans from Goldman Sachs, according to reports. The bank is developing software that would enable it to plug into the existing loan platform on Amazon.
The loans would be given directly to Amazon Merchants through the existing loan platform of the online retail giant.
CNBC and the Financial Times reported yesterday that the information about the partnership was not given in detail by the close source who decided to stay anonymous.
Amazon did not comment on the reports about the partnership but reiterated that it provides lending services to small and medium-scale businesses.
According to Amazon, lending is part of the infrastructure, programs, tools, and services it provides to its selling partners, particularly small and medium-sized businesses, who are basically involved in more than 50% of sold items on the Amazon portal. The Financial Times reported that the project could begin as soon as next month.
Goldman’s second partnership deal within a year
If both parties can close the deal, it would become the second time in a year that Goldman has signed a deal with a tech giant. Last year, the company also partnered with Mastercard and Apple to roll out the Apple Card. The iPhone-integrated credit card deal was able to give out about $2 million last year.
In 2011, Amazon started giving short-term loans to small and medium-scale enterprises that operate on its platform. The loan amount ranges from $1000 to $750,000, depending on the strength of the merchant and repayment capabilities.
Goldman didn’t immediately respond to a request for comment.
Goldman equally issues consumer loans in the United States through the Marcus online bank platform. Last week, David Solomon, chief executive of Goldman, pointed out the vision outlook for the company.
He, along with other executives of the bank, addressed investors on the future goals of the bank. One such goal is to become a banking-as-a-service firm for businesses. It means that the bank would be offering its know-how and business services across institutional, commercial, and retail banking in collaboration with corporate bodies.
Goldman could be taking more risks
For most banks, issuing loans is always going to be a risky venture, because there may be some defaulters. This is even riskier at the later stage of the US economic expansion, where many are expecting an economic downturn.
The state of the economy could delve into recession very soon, according to some indices revealed by economic experts. Already, some industries have started seeing dwindling activities.
However, Goldman executives believe the company has set the stage right to significantly minimize its risk. It says there is a reduction in loans given to customers of Marcus personal loan. It is also reducing its involvement in some other ventures to keep enough funds that would be available to merchants. The bank is also said it is working on other modalities to make sure the risk of lending loans would be dramatically reduced.
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