Goldman says its Marcus UK savings accounts are succeeding because everyone wants better rates

So far so good.
So far so good.
Image: Goldman Sachs
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Last week, Goldman Sachs launched its Marcus online savings accounts in Britain—continuing its relatively new venture into the world of consumer banking. The coming months will be an important test of how the Wall Street powerhouse measures up against incumbent financial firms and a host of digital upstarts. But so far, Goldman says it’s feeling pretty good.

Goldman is far from alone in the online finance game, but Marcus interest rates are at the top of the field for easy savings accounts in the UK. Its debut may spur other banks to offer more competitive savings rates.

The Marcus accounts, which offer interest rates as high as 1.5% annual equivalent rate (AER) with a minimum deposit of £1, have exceeded expectations since they became available on Sept. 27, according to Goldman. Marcus accounts for consumer customers have been available in the US since 2016.

“So far the number of sign-ups for Marcus by Goldman Sachs has been stunning,” said Des McDaid, managing director of Marcus by Goldman Sachs, in an e-mailed statement. ”Numbers have exceeded even our most ambitious expectations, and our interest rate is clearly a big draw for frustrated savers who have had to put up with a decade of low interest rates.”

The bank didn’t provide exact figures for the number of new customers or its internal projections for growth, making it difficult to independently measure the company’s success. But Goldman does have at least one advantage over incumbents: It isn’t encumbered with costly bank branches. Its competitors are, in many cases, gradually closing down brick-and-mortar branches as more personal finance takes place online.

On the downside, Marcus in the UK lacks a mobile app, which could make it less attractive to younger customers who expect to do just about everything on their smartphones. Monzo, a London-based fintech with a whizzy app, says it’s adding 20,000 new accounts each week, but it doesn’t pay interest on these accounts (yet). In the US, Marcus has a mobile offering through its Clarity Money personal finance app.

Goldman isn’t known for consumer banking, but stricter regulations on trading and other aspects of institutional finance have pushed banks to find new ways of making money. (The lender became a bank holding company at the depths of the 2008 financial crisis and is making greater use of that designation.)

Meanwhile, Royal Bank of Scotland (RBS) plans to start a consumer digital lender called Bó, according to Sky News. State-backed RBS is looking to push back against technology upstarts that threaten to win millions of customers from big bank rivals. Britain’s financial startups also include the likes of Revolut, which says it’s adding 7,000 new accounts a day but, like Monzo, doesn’t pay interest on these accounts. Starling, another upstart, pays 0.25% to 0.5% AER on accounts depending on the balance.