While most of its fellow financial giants have long embraced banking for the masses, Goldman Sachs (GS) has been known as an aloof and unreachable titan for the middle class.
Not anymore. With just one dollar and some personal information, anyone can now park their money in the Goldman Sachs Bank USA.
Rather than joining its peers in brick-and-mortar branches, Goldman will only offer online banking. And even though it’s not a huge return, Goldman’s savings rate is competitive: 1.05% annually. That exceeds the average U.S. savings rate of 0.06% and matches online rivals Ally Bank and Synchrony Bank, which offer 1% and 1.05% respectively. Online banks are able to offer higher rates of return, because they don’t have the costs associated with a brick-and-mortar store.
Goldman opened its online commercial banking business last week after completing its acquisition of GE Capital, though plans for the online bank started as early as 2012.
“This transaction increases the funding diversification and strengthens the liquidity profile of Goldman Sachs and GS Bank,” said Robin Vince, treasurer of the Goldman Sachs Group in a statement. He also noted that accepting deposits was a “strategic priority” for Goldman—which reported a 56% drop in profits for the first quarter—its fourth straight quarter of decline.
GS Bank, which prior to the acquisition of GE Capital brought in deposits in bulk with the help of brokers, is Goldman Sachs’ bid to diversify revenue at a time when its investment banking unit has faced pressures from market volatility.
But compared to its Wall Street peers, GS Bank still has a ways to go in retail. Its acquisition of GE Capital last week reportedly brought on board about $16 billion in deposits, most of GE’s employees, and other infrastructure, according to a press release. That gave GS Bank a total of about $114 billion in deposits. J.P. Morgan (JPM) and Wells Fargo (WFC) each logged deposits of $1.1 trillion by July 2015. But GS Bank’s savings rate is much higher—both J.P. Morgan Chase and Wells Fargo offer 0.01% or more depending on the product.