RE: Good morning ladies and gentlemen, self identifiers and self isolators3 Mar 2020 06:21
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Goldman’s online-only business has already gathered more than £13bn in deposits since it opened in September 2018. Metro Bank’s branch-heavy model took more than seven years to hit the same level.
Marcus’ aggressive approach — offering the highest rates in the market for easy access savings accounts — has driven up costs for small- and midsized banks that rely on such savers. Tesco Bank, Virgin Money and Yorkshire Building Society were among a string of lenders that increased their interest rates or introduced new products in the month following Marcus’ launch, according to analysis by Moneyfacts.
JPMorgan, meanwhile, is expected to go further than Marcus with a faster push into lending, and has lined up an experienced chairman — former senior City regulator, Clive Adamson — to lead the business. In addition to its US retail expertise, the bank has a substantial UK-based payments business, which people close to the company pointed to as evidence it would not have to “start from zero” in the new market.
With an annual technology budget of more than $11bn, it is hoping that more advanced systems will keep costs low enough to turn a profit even in the competitive UK market.
John Cronin, analyst at Goodbody, said: “If you look at margins on UK retail banking products and forget about legacy cost structures and conduct issues, margins on some new business are very attractive.”
Alongside Metro’s decision to rein in its branch opening plans on Wednesday, Lloyds Bank and Virgin Money announced a cumulative 1,300 job cuts as part of efforts to reduce the cost of their legacy high street networks.
However, despite the cuts, most executives still believe their old-fashioned networks will provide some protection against the likes of Chase and Marcus.
“The only people making money in UK banking are the incumbents. And they don’t make it by offering mortgages and personal loans funded by top of best-buy table deposits,” said a senior executive at one high street lender. “The incumbents make money out of inertia, infrastructure and their back books.”
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