Wednesday, December 3, 2008

Getting to Main Street

Would you bank online at Goldman Sachs? From today's WSJ:

"In the latest evidence of how Wall Street is seeking to broaden its sources of funds, Goldman Sachs Group Inc. is weighing whether to launch an Internet banking operation, according to people familiar with the situation."

Goldman, like every other highly leveraged financial institution, needs stable deposits to help shore up the balance sheet. Its competitors have been more focused on strategies to buy existing bricks and mortar banks. The $5k in your savings account earning 2% is now very important business.

If you bank online now, switching costs are already pretty high. Since there is rarely a reason to go to the bank itself, your laptop has become the bank. All your payees are already loaded. As long as the software and platform your bank uses is good enough, it is quite a hassle to switch.

Can Goldman attract Main Street deposits without making an acquisition? I wouldn't mind a Goldman Sachs check book but I can't imagine getting one.

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