Goldman Sachs made a dramatic departure from their legacy, entering the digital age and embracing an online consumer loan market. In a recent report on the Future of Finance, Goldman Sachs estimated that traditional lenders stand to lose over $11 billion in annual revenue to technology-enabled alternative lenders by 2020. This might be the reason why Goldman Sachs may have decided to move out of its comfort zone.

As a line of defense, lenders need to embrace digital disruption with following opportunities:
    1. Partner with existing online lenders: Funding Circle and RBS have collaborated to provide finance to thousands of small British businesses, and Citigroup recently announced that it will use LendingClub’s platform to supply $150 million to underserved borrowers that its branch network is unable to reach. This provides banks with a unique opportunity to leverage an online lending platform to gain more clients.
    1. Create your own online lending platform: Financial institutions such as Goldman Sachs can create their own lending platform providing existing customers with a quick access to credit and attracting new borrowers and businesses. In addition, this enables lenders to operate without the burdens of legacy costs and fixed infrastructure and expand without opening any physical branches.
  1. Create both: Lenders can create their online lending platform and partner with other online lenders, exchanging loan applications that do not fit their specific credit box for mutual growth and success.
This trend of hybrid lending converges traditional and emerging lending to provide an unsurpassed experience and is bound to be adopted by other leading financial institutions. By setting up their own platform, hybrid lending has gained the strongest push by a financial institution such as Goldman Sachs. In addition, this will bring more competition in the market putting further pressure on other traditional lenders. It will be interesting to see how Goldman Sachs will compete with the new brand of financial services, delivering cheaper, more transparent and flexible products with great user experience.Lenders such as Goldman Sachs need an agile technology solution to adopt hybrid lending. A cloud-based solution can be an excellent solution offering flexibility, transparency and scale that is needed to grow in this disrupting environment. Buying a cloud-based platform from technology vendors such as Cloud Lending can help lenders quickly deploy their online lending business and rapidly bring new products to market to catch up with established online lenders.