More than meets the eye
Goldman Sachs looks and feels like your run-of-the-mill investment bank. But it has previously shown that it is willing to takes some risks and bet on some rather new and shaky technologies. Now, it is showing that it cannot only compete in real world banking, but in online as well.
Goldman is opening its doors to the virtual world with the launch of GS Bank, an FDIC-insured, Internet-based savings bank for the masses. And we mean masses—to sign up, all you need is one dollar and a stable internet connection.
The interest rate is a competitive one too - 1.05% annually. In contrast, the average U.S. savings rate is 0.06%, and online rivals Ally bank and Synchrony Bank offer similar rates to GS, 1% and 1.05% respectively.
Online yields are typically much more than their traditional counterparts, since they don't have to spend money maintaining brick-and-mortar buildings.
GS Bank is a result of the acquisition of GE Capital Bank, the online retail bank previously run by General Electric’s capital arm. Along with the bank, it was able to get $16 billion in deposits, most of GE’s employees, and other infrastructure.
All this is a move by Goldman to diversify revenue streams and strengthen liquidity in a market where traditional investment banking is facing large market volatility.
“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, Inc in a press release. “We are pleased to add the capability for accepting online deposits, a strategic priority for the firm and for GS Bank.”
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