What Is Goldman Up To?
My brother in-law loves to say that everyone has an angle.
I’ve been pondering this admonition the last couple of days with the news that Goldman Sachs is following up its recent acquisition of approximately $17 billion of GE Capital Bank deposits and it’s online retail deposit-taking platform by offering online savings accounts to the masses. Consumers are now being offered savings accounts with no minimum deposits and no transaction fees as well as very competitive certificates of deposits. GS is also considering offering consumer loans. (https://www.gsbank.com/en.html).
According to the Fed, which approved the acquisition in March, Goldman Sachs, has approximately $859.9 billion and is already the fifth largest insured depository organization in the United States by assets. In understated bureaucratic ease, it describes Goldman as a wholesale bank “whose activities are focused on high-net-worth individuals, institutional clients, and corporations.” According to NBC news it takes about $10 million to open a wealth management account .
Something doesn’t seem quite right to me. It’s as if Donald Trump started staying at Econo Lodge. Plus with low interest rates and regulations squeezing fee income this seems like a strange time to start slumming it with retail banking. What’s behind this sudden interest?
One reason for the move towards consumer banking is undoubtedly diversification.
My guess is that another prime reason is that Goldman Sachs feels that the real future growth in consumer banking is going to come from the integration of financial tech firms into the stodgy old banking industry. According to the WSJ there has been an “exodus” of Wall Street talent, including from Goldman, to the West Cost. With the acquisition of GE’s online bank, has a scalable platform with which it can compete against the tech based bankers of the future.
As banks morph into tech companies and tech companies morph into banks where does this leave traditional brick-and-mortar banks and credit unions? If I knew the answer to that question I’d be in Vegas.
Here are some links if you want some more information.