Curious news Wednesday that Goldman Sachs Group Inc. is considering starting an online bank. As
The Wall Street Journal first reported, the new unit would broaden Goldman's portfolio and provide another outlet through which to seek deposits. The New York financial giant
became a bank holding company in September and has accumulated about $20 billion in deposits so far.
But here's a question: If Goldman's objective is to further swell that number, can an online bank accomplish that? Surely, it is reasonable to assume that at a time of massive bank consolidation and failures, record foreclosures and frozen credit that many consumers will opt for face-to-face banking, at least in the short term. This may be even more true when it comes to deciding which financial institution will shelter one's life savings.
Of course, as our
Dealscape colleague George White noted, an Internet bank would provide Goldman a more reliable source of capital than the turbulent debt markets. And certainly launching an online bank is a less capital-intensive means of capturing deposits than acquiring banks outright -- another option Goldman is considering, according to the WSJ. (So far it has opted by build deposits by acquiring assets on the wholesale market.) And as Goldman looks to rebound from what is expected to be a $2 billion fourth-quarter loss, pitching its products and brand through as many channels as possible can't hurt.
- Suzanne Stevens
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