U.S. investment bank Goldman Sachs will launch its digital retail bank Marcus in the U.K. in coming weeks, and the European mainland will follow soon after. A cause for concern for regional banks in Switzerland?
The announcement was received with maximum attention at German newspaper «Handelsblatt». Under the headline of «Goldman Sachs targets savings banks» the report focused on the intentions of the U.S. investment bank. European boss Richard Gnodde announced the bank's intention to roll out the online-platform «Marcus» in Germany, its third target market.
The U.S. digital retail banking sector has grown rapidly in recent months. The past one and a half years has seen Marcus – the name is an homage to banking doyen Marcus Goldman – broaden its services from consumer credit to savings accounts. Within an 18 month period, the platform attracted more than $20 billion in savings and approved some $3 billion in consumer loans.
Swiss Move on the Cards?
Enough success to warrant an entry into Europe, with the U.K. in the vanguard of its plans. The next «option» is Germany, and with it continental Europe, as finews.com confirmed with sources close to the bank. A move into Switzerland may follow, they said.
Is this a cause for concern for retails banks? Maybe not in Switzerland, since that market is relatively intransparent, and doesn’t offer enough scale for global competitors. Also, the example of Twint shows that Swiss companies are relatively successful in fending off competitors such as Apple Pay.
Making Fun of Rivals
However the confidence which has driven the Marcus planners for the U.K. and German markets should provide food for thought. Both European countries are seen as «overbanked».
The closely-knit networks of savings and regional banks in Germany, and Switzerland, could make them difficult targets. None of this worries Marcus. The opposite is true.
In the U.S. the retail bank runs an advertising clip (see video below), which pokes fun at rivals, saying their conditions are such that you might just as well stash your money under a mattress.
Marcus certainly pursues a tough discount pricing strategy in the U.S. The digital bank can afford to do so with a $500 million subsidy from the mother company, and the support of its balance sheet.
Nimble and Self-Confident
More important still is what Marcus' operational boss Omer Ismail outlined at a recent podium discussion. Marcus is a bank. But like a fintech startup it doesn’t carry legacy businesses. Furthermore, the Marcus platform is nimble enough to adapt to change and design new offers at short notice, Ismail claims. Such plans are already in place for sectors such as credit cards, asset management and pensions.
All this has been developed in keeping with the Goldman Sachs ethic. Ismail may dress like a casual fintech entrepreneur, but he has served the mother company for more than a decade. This is where he learned about the bank's credo, which is to be simply the best bank in the world. It will be interesting to see how Marcus would fare pitched against the cantonal and Raiffeisen bankers of Switzerland.
