Goldman Sachs shuts savings app Marcus to new UK customers

By Sunniva Kolostyak

Goldman Sachs is closing the doors for UK customers looking to open an account with Marcus, its easy access savings business, as deposits are nearing regulatory limits.

According to Reuters, the increase in deposits surged during the coronavirus lockdown – the UK arm of Marcus has attracted more than £8 billion from around 100,000 new account holders since January, and £4 billion since the lockdown began.

The spike brings Marcus’ total funds to about £21 billion (from 500,000 savers), close to the retail deposit regulation cap of £25 billion.

The Goldman Sachs’ digital brand launched in 2018, offering market-leading rates to savers looking for cash returns with 12-month fixed-rate accounts, helping the investment bank diversify into consumer banking.

Des McDaid, head of Marcus UK, told Reuters that it has seen its growth accelerate under lockdown as people are taking the time to reorganise finances and getting the best deal for their money. However, due to British banking rules demanding ring-fencing of retail deposits above £25 billion, Marcus would have to become a separate legal arm, with its own board, and limit how much capital it could share with other Goldman entities.

“Separating Marcus financially and operationally from Goldman Sachs would be a significant change to our low-cost business model, which allows us to pay consistently competitive rates to existing savers,” McDaid told the news agency.

Also commenting on the news, Simon Taylor, Head of Ventures at 11:FS, said the pandemic has brought forward new customer behaviours: a rise in digital channel usage, digital account sign up and a rush by consumers to savings.

“Marcus had all three of those, supported by the best instant access rate on the market. It’s unsurprising this surge has come to them, but for the industry it says there is too much of a good thing. It will be interesting to see how Marcus is able to pivot this customer acquisition in a broader product offering in the coming months and years in the UK.”

Sankar Krishnan, Executive Vice President and Industry Head, Banking and Capital Markets at Capgemini told IBS Intelligence: “Marcus has been a tremendous success in both the US and UK and arguably was the fastest one-click experience for opening a bank account, a certificate of deposit or a fixed deposit. The success of the app and its ability to attract billions in deposits must be commended.

“A temporary pause is a good thing for Marcus’ executives to reset their strategy and explore new opportunities to better service their customers. This is good news as it further enforces the drive to digital, which is especially important during and after the current Covid-19 environment.”

The temporary shutdown could represent a blow to millions of savers in the UK, as it reduces competition and pressure on other banks to match its rates, Reuters said.