Goldman Marcus UK pauses new accounts - Business Insider - Business Insider

. Deposits have spiked during the coronavirus crisis — £4 billion have flooded in since lockdown began, Des McDaid, head of Marcus UK, told Reuters — and Marcus now holds a total of approximately £21 billion from over 500,000 savers since it debuted in 2018.

In the short term, halting new account openings will put the brakes on Marcus' momentum in the UK. Skyrocketing deposits help Marcus become a more serious contender in a digital banking market that includes other high-profile digital banks like Monzo, Starling, and Revolut. And high-yield savings accounts are likely gaining notice from consumers looking for a safe place to store their savings during the economic uncertainty accompanying the coronavirus crisis.

But freezing customer acquisition efforts will mean that Marcus UK will miss out on much of the buzz. This is not entirely a loss, however, as it will limit the number of deposits on which the bank has to pay its high 1.05% interest rate at a time when major US and UK banks have set aside a combined $78.8 billion to prepare for the economic fallout from the coronavirus pandemic.

But Goldman seems to have deemed the risk of a loss of momentum worth it in exchange for extra time to decide the long-term direction it wants to take Marcus in the UK. Goldman is aware of the fact that a new account freeze will slow growth and is using the measure to avoid having to ring-fence Marcus in the near future.

McDaid told Reuters that "separating Marcus financially and operationally from Goldman Sachs would be a significant change to [its] low-cost business model, which allows [Marcus] to pay consistently competitive rates to existing savers." Throttling Marcus' growth enables Goldman to more slowly approach the £25 billion threshold, giving it time to decide if and when it wants to expend the resources to handle process of ring-fencing.

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