Dive Brief:

• Goldman Sachs has started building software that would allow it to offer small-business loans to U.S. customers over Amazon’s e-commerce platform in a project that could launch as early as next month, according to people who talked to the Financial Times and CNBC.
• If the deal goes through, it would mark Goldman’s second partnership among the big four tech giants within a year. The bank’s Apple Card, which launched in August, generated $2 billion in outstanding loans by the end of 2019.
• Amazon CEO Jeff Bezos wrote in a 2015 shareholder letter that he was looking to partner with banks to manage the credit risk associated with expanding the company’s lending presence. CNBC reported in 2018 that Amazon had struck a confidential deal with Bank of America. But the tech giant deliberately slowed the growth of the platform in 2017 after a sharp uptick a year earlier.

Dive Insight:

Goldman Sachs, during its investor day last week, said it aimed to expand its set of loan products beyond those offered by its digital bank Marcus and the co-branded Apple Card. The bank also made clear that it wanted to ramp up its "banking-as-a-service" presence through corporate partnerships.

Amazon, too, has been looking to bolster its stable of partnerships — particularly as an infrastructure provider. Its subsidiary, Amazon Web Services (AWS), is a cloud provider for another bank, Capital One.

This would not be the first partnership between Goldman and Amazon. The bank said in December that it is migrating production of its securities database, Goldman Sachs Marquee, to AWS.

Neither Amazon nor Goldman commented on Monday's reported negotiations, but the tech giant said lending was "part of the services, tools, programs and infrastructure we provide to our selling partners, mostly small and medium-sized businesses, who account for more than half of everything sold in Amazon’s stores."

Amazon Lending, which launched in 2011, uses algorithms to determine creditworthiness. It had more than $863 million in outstanding small-business loans on its balance sheet at the end of 2019, according to the Financial Times. Loans are for 12 months or less and range from $1,000 to $750,000, Amazon said in a 2017 release.

Goldman Sachs’s consumer unit saw a 41% increase last year, but the segment as a whole accounted for less than 3% of the bank’s revenue. The bank laid out a growth plan for its consumer arm last week that involves doubling deposit balances at Marcus by 2025 and nearly tripling its consumer loans and card balances during that time frame. The bank also said it wants to introduce checking accounts by 2021.