Marcus: By Goldman Sachs sounding more like an Eau de Toilette for Bankers than a digital bank, has recently launched its UK operations after an extremely successful two years in the US market, accumulating more than $20bn in deposits and lending more than $3bn to customers. Goldman Sachs, the 149 year old Bulge Bracket titan has joined digital Banks like Monzo and Atom in an attempt to disrupt the well established retail banking market. Des McDaid UK managing director of Marcus stated that goal of the bank “is not to compete with the small players, the goal is to move people away from the high street banks that control 80 per cent of the market.” Marcus has a seemingly winning formulae; start-up digital players are at a disadvantage as they lack scale and market penetration, and traditional retail banks are hindered by size and legacy systems. As a result of this Marcus is able to offer a 1.5% rate on savings from £1 to £250,000 making it the highest yielding instant-access account on the market by 10 basis points.
There has been a 10% increase in institutions offering instant access saving accounts in the last two points according to Moneyfacts
However, last week, Barclays announced that they would be ‘stepping into the US ring’ with the Wall Street giant in an attempt to challenge Marcus. Barclays has a strong US Loan book comprising of approximately $25 billion to both its online bank borrowers and bank customers. The US branch boasts 13 million strong customer base and aims to leverage Barclays UK knowledge to create a checking or current account that should be in the market by next year.
Currently the US lags behind Europe in adoption of point-of-sale technology and contactless payments. With innovation and adoption on the horizon, Barry Rodrigues, head of cards and payments at Barclays International told the Financial Times that Barclays wants “to ride the curve of that [tech] adoption.”
Banks are beginning to move towards either acquiring or creating fin-tech companies, with 2017 seeing more fin-tech acquisitions than any other year in the US. The combination of data ubiquity, legacy systems and a change in customer preferences is forcing the Banks to re-think their strategy once again.