Goldman Sachs is planning to launch a cash management service next year, and might even offer its existing corporate clients more for their deposits as a way to lure them into signing up for the new service. Reuters cited anonymous sources, revealing that the fifth-largest bank in the United States is reportedly six months into building the technology needed for the service.
According to management consulting firm Oliver Wyman, the wholesale payments and cash management business resulted in about $250 billion in global revenue in 2017 for big banks. That stable source of revenue generated by the service has already attracted the likes of Citigroup, JPMorgan Chase, BNY Mellon, HSBC, Standard Chartered and Deutsche Bank, which all currently dominate the market.
Goldman Sachs set a goal in 2017 to generate $5 billion more in annual revenue by 2020 through the increase of reliable, fee-based businesses. It has found success with its online bank Marcus, which launched in 2016. Earlier this month, the bank announced that it was boosting the interest rates on the Marcus savings accounts, paying customers a 2.25 percent rate. It also raised the rate on a one-year certificate of deposit (CD), up 10 basis points.
Marcus rates are much higher than the national average, and the strategy is paying off for Goldman Sachs, which has more than 2 million users and received $27 billion in deposits. Last year, Marcus launched in the U.K., with the company noting that its performance there has “exceeded every expectation.”
Des McDaid, managing director at Goldman Sachs, said Marcus’ customer base in the U.K. was at 100,000 since its September launch.
“U.K. savers have been waiting for something for a long time,” said McDaid. “We said we’d put the interest back into savings. We did that by creating a bit of a buzz, a bit of a noise around our launch, and it’s just taken off.”