In addition to its direct-to-consumer model, Deserve operates a business-to-business offering:
The startup leverages technology to assess creditworthiness. Initially known as SelfScore, the fintech began by targeting international students unable to get traditional credit cards before expanding to other groups of consumers who struggle to secure these products due to a lack of credit history. Given its target audience, Deserve can't rely on conventional credit scoring systems; instead, it leverages machine learning and alternative data to determine creditworthiness.
Deserve also operates a Credit Card-as-a-Services model. It white labels its technology to financial institutions and other corporations to enable them to offer their own branded credit cards. This is a strategy we've increasingly come to see in the fintech space as players, likely cognizant of incumbents' ability to pull the rug out from under them, offer their technology stack to their established peers.
The news is illustrative of Goldman's continued deal-making appetite in the fintech space — a strategy that can help it outcompete its peers. fintechs — including Clarity Money, Final, and Bond Street — the bank also acquired their tech talent, allowing it to rapidly accelerate the digital capabilities of its Marcus team. That it was one of the first incumbents to launch a digital-only bank illustrates the payoff from this approach.
But Goldman has also continued to invest heavily in fintechs without acquiring them. In the first three quarters of 2019 alone, it's made 11 fintech investments, second only to Citi, FT Partners. This likely allows it to keep close tabs on the latest innovations in the financial services industry and gives it a leg up if it wants to acquire these players in the future.
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