Goldman Sachs Bank Aggressively Going After Deposits

I noticed this report in Forbes last week which discussed a recent increase that Goldman Sachs was making on their savings account interest rates. As you can see in the above graphic they now offer a 1.2% return on their savings account with a minimum investment of just $1. They are aggressively seeking new savings to boost their deposits.

So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.

For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays. These deposits are all insured up to the FDIC maximum.

What was also noticeable was that Goldman Sachs is advertising heavily on Google. Their ad in the search results for savings accounts and CDs was always right near the top and their display ads kept on following me around at many websites since I started this research. What was also interesting is that their ratings on the aggregator sites was usually very high, often 5-stars. People seem to like dealing with them.

While Goldman Sachs became a bank holding company during the financial crisis it is only the last couple of years where they have been embracing the retail banking side of their business. We have written about their consumer lending division called Marcus several times before and we just had their COO on the podcast last month. But we have not really looked at the other side of Goldman Sachs business – the deposit side. This is how they are funding their loans for Marcus.

Now, obviously Goldman Sachs Bank has more to offer than just Marcus. Goldman Sachs is a major lender to corporations all over the world but their banking division is looking to build up their retail deposits. Goldman Sachs had total deposits of $128 billion at the end of Q1 according to the Forbes article. The largest segment is from their private banking clients who are very different to the clients they are trying to attract online. But it is clear today they are looking to the mom and pop investor to help build their deposit base.

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rawraw
rawraw
Jun. 12, 2017 10:37 am

I am not sure if Goldman became a commercial bank in the crisis. They did become a bank holding company, however.
https://en.wikipedia.org/wiki/Goldman_Sachs#Conversion_to_a_bank_holding_company

SLCPaladin
SLCPaladin
Jun. 12, 2017 10:45 am

1% over CPI inflation is sort of my bare minimum for investing in these types of things. Give me at least 3% in this environment and watch how quickly I load up on this risk-free offering. 1.9% is better than a sharp poke in the eye, but it is still running below year-over-year CPI inflation of 2%.

J, Karas
Jun. 15, 2017 10:53 pm

I’m only leaving a comment so I can receive notification of followup comments.

Ram Ahluwalia
Jun. 17, 2017 4:27 pm

Peter, another perspective here is that the higher rates is less about attracting deposits, and more about attracting mass affluent accounts, Higher coupon CDs are a nice form of lead gen.

Since they now have a mix of retail products, offering high CDs are a clever way to attract mass affluent rate-shopping customers.

GS Bank Customer
GS Bank Customer
Jun. 20, 2017 1:57 pm

I just got off the phone with GS Bank. They block access to the bank’s website outside of the following list of countries. I find it reprehensible that there is no explanation for why retirees in Costa Rica or travelers to over 100 countries cannot access their account. Even Vatican City isn’t on the list!

Not only are customers who happen to be in one of these countries blocked, but the error message on the site says to check back soon without explaining that they have been blocked.

GS Bank should be ashamed of themselves.

The list of “allowed” countries:

Australia
Belgium
Canada
Denmark
Finland
France
Germany
Hong Kong
Iceland
Ireland
Japan
Netherlands
New Zealand
Norway
Puerto Rico
Spain
Sweden
Switzerland
UK
USA
American Samoa
Austria
Bahamas
Bermuda
BVI
Chile
Falkland Isl
Gibraltar
Greece
Greenland
Guam
Guernsey
Isle of Man
Italy
Jersey / Channel Islands
Korea <— ***NOTE that they do not specify South Korea so apparently North Korea is allowed?
Luxemburg
Northern Mariana Islands
Portugal
Singapore
S. Africa
USVI
US Minor Outlying Islands