Barclays Targets US Customers With Digital-Only Bank
Marcus, Goldman Sachs’ online retail banking operation. rolled out in the United Kingdom recently, and it quickly became clear that the British banks were not going to take this development lying down. Indeed, they did not, as Barclays decided that sauce for the goose was certainly sauce for the gander, and has developed its own digital-only retail banking operation that targets the United States.
The new Barclays offering will take advantage of Barclays’ UK lineup to bring these services to the US. Since Barclays already counts around 13 million customers for loans, credit cards, and savings to its credit, that’s quite a bit of potential expertise and value that could be on offer here.
Barclays is playing this launch close to the vest. They’re not even talking about how many customers they hope to attract with this venture. However, there are some insights that can be gleaned; for instance, around 10 million customers currently hold a Barclays credit card, at least one that’s co-branded with someone else. Plus, Barclays has a digital operation that currently counts three million users to its credit.
Interestingly, Barclays is planning to launch in a bid to directly pursue a similar market to Marcus, right at a time when Goldman Sachs is pulling back on the online lending business thanks to concerns over the current credit cycle.
With interest rates already seen rising—which in turn will send adjustable rate mortgages and similar products upward—this means increased risk of default. But with Marcus set to stage a launch into Germany, according to reports, Barclays may have to risk the default risk rise to pursue market share rather than cede it all to Marcus.
The problem here is that Barclays is on the wrong foot. It’s got to put its service offerings into a field already pretty heavily clustered with options, one that might well prove a little more xenophobic than it would like to see. What motivation would US users have to turn to a “British bank” when they have more than enough options here already? Meanwhile, Marcus got in on the “challenger bank” phenomenon fairly early, as Brits have already been shown loving mobile payments and anything similar.
Circumstances may crater Barclays’ ambition, but it’s certainly doing its best to snatch victory from the jaws of mobile banking defeat.