Goldman Sachs, once vilified as a "great vampire squid wrapped around the face of humanity," has extended its reach to offer savings accounts with no minimum for opening one.
The online savings account and certificate of deposits offered by subsidiary Goldman Sachs Bank, or GS Bank, is competing with other free "high-yield" accounts. While there are no transaction fees and no minimum deposit to open an account, there is a minimum of $1 to earn the 1.05 percent interest rate.
Goldman’s savings account lacks some of the "nice-to-haves" that other banks offer, like a mobile banking app or online self-setting savings goals, NerdWallet banking expert Devan Goldstein said.
But the 1.05 percent rate is in the top tier nationally among the competition, and the $1 minimum balance to earn interest is also on par with NerdWallet’s favorites among online savings accounts, Goldstein pointed out.
For instance, Ally Bank's online savings account offers a 1 percent interest rate while it limits customer transactions to six a month. Synchrony Bank offers a 1.05 interest rate and customers can avoid a monthly fee by maintaining a balance of $30 or more.
"I’m interested in seeing whether GS Bank stays competitive once they’ve successfully met their near-term target for building a customer base, or if this is just an attractive initial offering to generate buzz," Goldstein said.
Among the downsides are no ATM cards for customers and GS Bank doesn't offer online bill pay or the ability to deposit checks online. Instead, customers have to mail them. There's also a limit of six withdrawals per statement cycle.
The move by the Goldman Sachs Group may help satisfy regulators who are requiring Wall Street banks to have more longer-term funding sources like customer deposits. These can be more stable than, say, the mortgage-backed securities that contributed to the 2008 financial crisis.
Rolling Stone magazine famously described the bank in 2009 as a squid "relentlessly jamming its blood funnel into anything that smells like money."
The GS Bank business last year acquired an online deposit banking platform from GE Capital Bank. GS Bank said last week it completed the acquisition and assumed about $16 billion in customer deposits.
“This transaction increases the funding diversification and strengthens the liquidity profile of Goldman Sachs and GS Bank,” Robin Vince, treasurer of The Goldman Sachs Group, said in a statement last week. “We are pleased to add the capability for accepting online deposits, a strategic priority for the firm and for GS Bank.”
Earlier this month, Goldman Sachs announced a $5 billion settlement with the U.S. Justice Department and other authorities for the bank's role in the 2008 financial crisis. The settlement included a statement that the agreement was not an admission of wrongdoing.