Goldman looks to online banking
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KAI RYSSDAL: Once upon a time it took a couple of million dollars to open an account at one of the most prestigious investment banks in America. Today there's word Goldman Sachs might soon be scouring the Internet looking to raise some quick cash.
Just a couple of months ago the Wall Street powerhouse decided the investment banking wasn't such a good idea anymore. So it turned itself into a full-service operation. That allows it to go after deposits. And today the Wall Street Journal reported Goldman could soon become an Internet banking start-up.
Here's our Senior Business Correspondent Bob Moon.
BOB MOON: When you're faced with insufficient funds, you need to beef up your deposits fast. But some Wall Street analysts were shaking their heads skeptically over the idea that the world's premier investment bank might be considering hitting the Internet with hat in hand.
Howard Davidowitz is a retail consultant in New York.
HOWARD DAVIDOWITZ: This is a company that deals at the highest levels with America's largest corporations, in the most sensitive sorts of deals, with the wealthiest people in the world. I don't see how this enhances their brand.
JON OGG: If they want to do that, then they might as well start selling stamps online too.
Investment advisor Jon Ogg is a commentator for the financial analysis Web site 24-7-Wall Street. He says trying to stick just a toe in the water with an online-only banking operation would be no substitute for having neighborhood branches.
OGG: What's the easiest way to go scoop up a ton of deposits right now? It's not by flooding the Internet with applications for an online bank. It's by going out and acquiring physical deposits that are out there.
Richard Speer agrees. He heads an Atlanta consulting firm that specializes in electronic banking.
Richard Speer: There's no shortage of Internet banking offerings. In general, most of those have been very successful in attracting high-rate deposits. They have not been successful in building relationships.
Speer calls Goldman Sachs a "highly intelligent" operation -- smart enough, he says, to figure out that online banking by itself isn't enough. Then again, it's hard to imagine such a prestigious institution offering toasters.
I'm Bob Moon for Marketplace.