NEW YORK–Goldman Sachs, which once required a minimum $10 million in order to become a customer, has lowered that number a bit: to $1.
To date it reports having attracted “tens of thousands” of new accounts, although it’s toughest fights are likely ahead.
The elite Wall Street firm has opened GS Bank and is offering “peace-of-mind savings” and “no transaction fees” through bank services that are online only.
As The New York Times reported, “It is the crystallization of an extraordinary moment in the halls of American finance. Goldman, like other marquee banking companies, is hunting for new business as its traditional ones falter. Regulations rolled out since the 2008 financial crisis have put a crimp in deal-making, Wall Street’s traditional expertise. The high-powered bond trading desks that generated most of Goldman’s pre-crisis profits now make only a fraction of what they did before.”
In response, Goldman has made plans to roll out 401(k)s, refi’s for people with credit card debt, and new investment funds that can be purchased by anyone with an E-Trade account. It will all be online only. Goldman believes that by avoiding traditional branches and tellers it can avoid expenses and find profits in the low-margin environment, even though it has very little experience in retail banking.
GS Bank was recently offering a 1.05% rate on savings accounts, approximately double the national average, according to The New York Times.
The Times noted that before the financial crisis Goldman did not even have a federally insured bank; it was forced to open one as a condition of receiving bailout funds during the financial crisis. Initially, the bank was viewed by executives as a drag. More recently, though, Goldman has come to view the bank as one of its brightest opportunities, the Times added.
Goldman Sachs has reported it has opened tens of thousands of new accounts in its first few weeks, in addition to 150,000 accounts it acquired from GE Capital. Analysts told The New York Times collecting deposits is one thing; being able to successfully make smaller loans will be another.