Softly spoken and with a distinct British modesty, Des McDaid is not what you picture when you think of a Goldman Sachs banker.
That’s because the UK boss of Marcus by Goldman Sachs, the bank’s online savings account, isn’t a typical investment banker. Before joining Goldman Sachs in 2017 he was running TSB’s savings and loans business and spent stints at Dutch bank ING and Natwest.
When we met in his corner office in London this week, he talked about a bank holiday spent clearing the loft — hardly the high-flying lifestyle of a master of the universe.
“Coming from a retail background you’re bringing a different perspective,” McDaid told Yahoo Finance UK. “You’re just changing the emphasis.”
During a half hour conversation at Goldman Sachs’ London headquarters McDaid talked about launching Marcus in the UK, expansion plans, Brexit, and the UK fintech landscape.
‘It’s like having kids’
Marcus launched in the USA in late 2016 and was Goldman Sachs’ first foray into retail banking. McDaid was recruited by Goldman to launch the business in the UK, its first international market.
It was a shrewd hire. Launched last September, it has already signed up 250,000 UK customers who have deposited over £8bn in its online 1.5% savings account.
“It’s 8 months at the end of this month, which is amazing how fast it’s flown,” McDaid said. “It’s almost like having kids, they just keep getting bigger and bigger.”
Despite Goldman Sach’s history in investment banking, McDaid said the bank’s staff have been “fantastic” to work with.
“Very few banks have launched and launched at the scale we did,” he said. “To an extent, we built for scale on day one. It was that level of ambition which is I think also what attracts you to a company like Goldman. They want to be a success in this business.”
McDaid puts the rapid growth down to Goldman’s brand and a sleepy savings market in the UK.
“The industry didn’t talk about savings anymore,” he said. “It wasn’t really out there.
“You had the big banks who’d gone quiet on savings because they had lots of liquidity, they were comfortable, it wasn’t something they were chasing, and the newer, smaller banks were there but they didn’t really have the presence or the scale to be consistent.”
Marcus launched to much fanfare in the press and with an ad campaign highlighting their competitive 1.5% savings rate.
“For us, we were uniquely placed because we were a large business coming through that people had heard of,” McDaid said. “We had the balance sheet and the scale so that we could go out and offer to a good range of customers, but also be consistent with it.”
So how long can he guarantee that 1.5% rate, which is double the Bank of England’s base interest rate?
“Our customers want a good deal from us and part of the contract with us is we’ll pay you a consistently competitive rate,” McDaid said. “I don’t want to get locked in to I’ll pay 1.5% or whatever. But what I do have to do is give my customers value.”
‘We’re committed to the UK’
Speculation has been mounting as to what Marcus will do next. The business already offers loans alongside savings in the US. This would be an obvious next move in the UK.
“Our focus very much is to build out the savings offering we have,” McDaid said. “We launched with quite a simple, straight forward offering but we’re also conscious of things that we didn’t do at launch — things like joint accounts, cash ISAs, we don’t offer term accounts. All of those things we want to develop over time.”
Goldman’s UK chief executive told the Financial Times last May that the bank was planning to launch Marcus in Germany.
However, the same paper reported this week that these plans had been delayed. The reason? Brexit’s drawn out timetable has lessened the need for a mainland European operation.
“We’ve launched in the UK at such a pace and we do want to build out the UK,” McDaid said when asked about the delay. “Whether there’s anymore to that? There’s not really.
“Over time, it’s almost inevitable that we’ll want to move to other areas or other countries. We’ve said Germany feels like the next logical location for us but nothing is decided.”
Has Brexit affected the business in other ways?
“To me the answer is no,” McDaid said. “Individually, people still need to save. It’s just a financial need.
“I think regardless of the outcome of Brexit, for us what’s important for us is we’re still there and we’re committed to the UK, we continue to have great products for our customers.”
175 people work on Marcus in the UK and the company has just opened a new call centre in Milton Keynes. Goldman Sachs UK is also close to completing a $1.4bn new headquarters a stone’s throw from its current London location.
”We will probably hire about 50-70 people in Milton Keynes over the next few months just to sort of build out that business, so we’ll finish the year at north of 200 people, probably nearer 250 people,” McDaid said.
‘We’re not adverse to partnerships’
Marcus is one of a number of new retail banking brands that have launched in UK in recent years. Others include Monzo, Revolut, Atom, Starling, and N26.
“Some of them have really made a lot of noise and a lot of impact by actually picking some good sweet spots and some good customer issues, whether that’s customer experience, whether that’s the app,” McDaid said.
“They’re getting customers, they’re getting a large customer base. Are they getting the full usage of that customer that the high street bank has? Maybe not yet. But they’re definitely making people stand up and notice.”
One way of making the most of their user base is by selling other people’s products through their apps. Monzo has inked a savings deal with Investec and Starling has an investment deal with Moneybox.
“We’re not adverse to partnerships at all,” McDaid said. “If it made sense for us as a business, it makes sense for our customers, we would definitely look at it.
Are they looking at partnerships right now?
“Possibly,” he said with a chuckle. “To an extent that we’re always in discussions and talking but there’s nothing we can share at the moment.
“There’s more we can do and I just think there’s a great future for Marcus in the UK and hopefully for our customers as well.”
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.