April 23, 2022 / VOLUME NO. 206


Banking Without the Bank

A TV ad aims to set the digital bank Marcus apart from traditional banks.  

“Banks have free pens,” says Rosamund Pike, an award-winning British actress. “But Marcus by Goldman Sachs has a high-yield savings account, with a rate that can earn you four times the national average. But then again … [she clicks the pen twice] … free pen.”

Currently, Marcus pays a 0.5% interest rate to savers, which is more than the 0.06% paid by the average bank, according to Bankrate. The digital-only unit of Goldman Sachs Group offers a limited menu of financial services: savings accounts, credit cards, personal loans and investment accounts. 

Goldman Sachs has historically been an investment bank; it became a bank holding company in 2008, following the collapse of Lehman Brothers Holdings. At $1.5 trillion in assets, it is one of the largest financial institutions in the U.S. and operates a commercial bank, Goldman Sachs Bank USA, in addition to Marcus. For all intents and purposes, Goldman Sachs is a bank. 

So, when is a bank not a bank? As Sam Kilmer of Cornerstone Advisors points out, consumers don’t really care.

“It matters less what a bank is and more that most banks have branch networks (with pens) hanging like a cost anchor around their necks while Marcus/Goldman does not,” he told me last week on Twitter. “Marcus has lower costs and is willing to pay more. Classic differentiation.”

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But there’s strength in being a bank, which Fifth Third Bancorp is betting on in its ad spots. In a recent ad, the Cincinnati-based bank’s bespectacled spokesperson refers to competition from online banks. But, she asks, “What happens if you need a little help?” The neobanks — little more than cardboard cutouts in the ad — fall to the floor as she’s joined by Fifth Third employees ready to assist.

“Everybody has an image,” Kilmer further explains. Fifth Third bills itself as “a real bank, with real people,” to differentiate itself from neobanks such as Chime while also offering similar features, including early direct deposit and ways to avoid overdraft fees. 

Customers like to have their cake and eat it too. They want to know that a branch is nearby so they can solve problems and talk to a human being, while at the same time relying more and more on digital services. Goldman Sachs’ Marcus may want to differentiate itself from banks. But most banks don’t think banking is a dirty word. They’re wagering on the value of traditional branch banking. 

Emily McCormick, vice president of research of Bank Director


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