Goldman Sachs closes Marcus to new UK users amid deposit surge
Goldman Sachs has closed its UK digital arm Marcus to new UK customers as it approaches regulated deposit limits during the country’s coronavirus lockdown, Reuters reports.
The easy access savings service closed its competitive 1.05% account to new customers on Wednesday, following a surge in deposits which jumped to £21 billion from 500,000 savers since it launched in 2018. Its 12-month fixed-rate account is still open to new savers.
“We’ve really seen our growth accelerate under lockdown as people hold off on discretionary spending and take time to reorganise their finances and get the best deal for their money,” Marcus UK’s head Des McDaid told Reuters.
UK banking rules stipulate that retail deposits totalling more than £25 billion must be ring-fenced – i.e. the bank would have to separate these assets from the rest, hence making its UK business a separate legal entity that has its own board and limits its shared capital with Goldman.
“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 added.
Since January, Marcus has seen more than £8 billion inflow from roughly 100,000 new users, and with £4 billion of this being deposited during the country’s lockdown.
“Since the onset of the pandemic, we’ve seen a number of things happen very rapidly: the sudden 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,” says 11:FS ventures head Simon Taylor.
It’s unsurprising this surge has come to them, but for the industry it says there is too much of a good thing,” Taylor adds.
This year Marcus slashed its easy access saver rate twice, from 1.3% to 1.2% in April, and then to 1.05% at the end of last month.
On 19 March, the Bank of England cut its base rate to 0.1%, after cutting it from 0.75% to 0.25% just days before. The cut took the base rate to its lowest ever level, making Marcus’ offering by far one of the most competitive.
RCI Bank, which is a lot smaller than Marcus, did offer an easy access account which paid 1.2%, but this was recently slashed to 0.9%. The closure of Marcus to new UK customers will alleviate pressures on high street banks, and likely reduce competition in the savings service space.
In the US, Marcus quietly launched it mobile banking app in January. At the end of 2019, its US total deposits for the first quarter stood at more than $50 billion, up from $42 billion at the end of 2019.