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Goldman Sachs Bank Aggressively Going After Deposits

Goldman Sachs Bank increases their interest rates to attract more deposits from everyday Americans

June 12, 2017 By Peter Renton 9 Comments

Views: 1,331

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.

Filed Under: Peer to Peer Lending Tagged With: deposits, Goldman Sachs, interest rate, Marcus

Views: 1,331

Comments

  1. rawraw says

    June 12, 2017 at 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

    Reply
    • Peter Renton says

      June 12, 2017 at 10:36 pm

      Thanks Rawraw. I have updated the post to more accurately reflect the changes to Goldman Sachs during the crisis.

      Reply
  2. SLCPaladin says

    June 12, 2017 at 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%.

    Reply
    • Peter Renton says

      June 12, 2017 at 10:38 pm

      SLCPaladin, I agree. I don’t see these savings account as a suitable investment at these levels. But they are a good place to park an emergency cash fund.

      Reply
  3. J, Karas says

    June 15, 2017 at 10:53 pm

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

    Reply
  4. Ram Ahluwalia says

    June 17, 2017 at 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.

    Reply
    • Peter Renton says

      June 19, 2017 at 6:04 am

      Thanks Ram. Good point. With a broader mix of products to offer I can see how CDs could be a good way to bring new customers into the fold for Goldman Sachs Bank.

      Reply
  5. GS Bank Customer says

    June 20, 2017 at 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

    Reply

Trackbacks

  1. Savings and Deposit Rates in a Rising Rate Environment - Lend Academy says:
    February 21, 2018 at 4:55 pm

    […] Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS […]

    Reply

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LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

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