Barclays Plc is set to compete with Goldman Sachs Group’s Marcus in the digital banking space, following the launch of a retail account offering US consumers low cost, digital-only bank and improved security of dealing with major financial institution. On Sunday, Financial Times reported that Barclays is planning to leverage its UK knowledge and expertise, citing Barry Rodrigues, Barclays International’s Head of Cards & Payments, to create a current or checking account for its U.S digital bank.
According to Rodrigues, the bank already provides loans, savings, and credit cards to about 13 million customers. The bank is going to launch checking while the process of building and testing is under the process, it is expected to appear in the market next year, he added. In the United States, Barclays has loan book worth $25 billion, which is divided into $20 billion and $5 billion to its co-branded card customers and online bank borrowers respectively.
Financial Times reported that a new customer-focused account would help the British bank to increase its $13.6 billion of U.S retail deposits, further expanding the funding of Barclays International Division. Mr. Rodrigues had joined Barclays a year ago after working for six years at Citi; he believes that using technology, Barclays can better effect than current US players. The bank ecosystem needs to grow before features that are standard in the UK enter in the United States, he added.
Although US retail banking is progressive in some areas including the use of quick response code for money withdrawals from ATM, it fails to keep a pace with Europe in other ways, said Mr. Rodrigues, such as the prevalence of cheques and contactless payments which uses point-of-sale technology. He hasn’t provided any targets for how many account customers the bank plans to attract. Initially, Barclays’ target market will be 3 million in its current digital bank and 10 million in co-branded credit cards.
Goldman Sach’s Marcus, on the other hand, has attracted over 50,000 customers since its launch in the UK. It has won 1.5 million customers and loaned over $4 billion by the second quarter of the year. Similar to Marcus, Barclays provides saving rates as low as 2% which is 20 times more than average rates offered in the United States for comparable saving products.