- British customers of Goldman Sachs can no longer apply for an online savings account with its Marcus app.
- Over 500,000 British users have opened an account with Marcus, collectively depositing more than £21 billion.
- Goldman stressed the decision was only temporary, and that its one-year fixed-rate account was still open for applications.
A woman looks at Marcus, a new savings and loans app recently launched by Goldman Sachs in New York, January 10, 2020.Mike Segar | Reuters
Goldman Sachs' digital bank Marcus has paused applications for its easy-access savings account in the U.K. because of a surge in deposits during the country's coronavirus lockdown.
New British customers of the bank will no longer be able to apply for an online savings account with Marcus as of Wednesday. Goldman Sachs said the decision was temporary and had to be taken because the volume of deposits was approaching regulatory limits.
Over 500,000 British users have opened a Marcus account, collectively depositing more than £21 billion ($27 billion). Under British banking regulation, lenders are required to ring-fence retail deposits in excess of £25 billion. That means Goldman would have to establish a separate legal entity for Marcus with its own board and limit how much capital it can share between its businesses.
The news was first reported by Reuters on Tuesday and confirmed to CNBC by the bank.
"We are temporarily not accepting new applications for our Marcus online savings account in order to manage our rate of deposit growth," Des McDaid, managing director of Marcus by Goldman Sachs, said in a statement emailed to CNBC on Wednesday.
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"This step will allow us to continue providing great value to our existing customers. We remain committed to expanding our U.K. retail business in future."
Goldman stressed that the decision was only temporary, and that its one-year fixed-rate account was still open for applications from British clients. The U.S. lender is hoping to reopen its online savings account in the coming months but said this will depend on market conditions.
The bank debuted its Marcus product in the U.K. last year, aiming to attract younger customers with its digital offering and competitive interest rates. Marcus cut the interest rate on its instant-access savings account to 1.35% late last year.
"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," said Simon Taylor, head of ventures at fintech consultancy 11:FS. "Marcus had all three of those, supported by the best instant access rate on the market."
"It's unsurprising this surge has come to them, but for the industry it says there is too much of a good thing. It will be interesting to see how Marcus is able to pivot this customer acquisition in a broader product offerings in the coming months and years in the U.K."
Source: cnbc.com
