Who Wants A Marcus Checking Account? A Lot Of People, According To One Survey

OBSERVATIONS FROM THE FINTECH SNARK TANK

As reported on CNBC.com, Goldman Sachs’ Marcus division plans to expand into checking accounts in 2021. According to the article:

“The bank is working to release a digital wealth management tool this year and a checking account in 2021. The new digital checking account will probably be delivered through the firm’s new Marcus app.”

According to one of its top executives, Goldman’s stated aim is to become a “leading digital consumer bank.”

With its success in savings accounts ($60+ billion in deposits) and credit cards (via its partnership with Apple on the Apple Card—regardless of what Apple says about it not needing a bank), Goldman seems well on its way towards that goal.

But does anybody want a Marcus checking account? According to a recent survey of US consumers, the answer is “Oh yeah.”

How Many People Want a Marcus Checking Account?

The Cornerstone Advisors survey didn’t just ask consumers if they would open a Marcus checking account when it launched—it asked what they would do with their existing primary account if they did open one.

Overall, 8.2 % of respondents said they would open a Marcus account. Interestingly, about 60% of those respondents said they would leave their primary checking account alone, making the Marcus account their “accessory” account.

That leaves 40% of the account-opening group—or 3.4% of all consumers—who would make the Marcus account their primary checking account.

That might not sound like a lot, but let’s put that in perspective. According to the study, 3.6% of Americans consider Capital One to be their primary bank. And with 3.4% of Americans calling it their primary bank, Marcus would have more “primary bank” customers than US Bank, PNC, and Truist do.

Ranked by the number of “primary bank” customers, Marcus would become the 5th largest bank in the US.

Who Are These People?

Who are these future Marcus acolytes? Consumers who intend to open a Marcus checking account are:

• Young, rich, and good looking. It’s probably not a surprise that 70% of them are Millennials. In addition, 35% of them earn more than $100,000 a year (in contrast to 14% of other consumers). And OK, I really don’t know if they’re good looking or not—but I bet they think they are.
• Financially literate and healthy. Nearly half of Marcus would-be applicants consider themselves to be very financially literate—twice as many as other consumers. And a third of them rate their financial health as “excellent”—again, twice the number of other consumers.
• Neobank junkies. Of those who intend who open a Marcus checking account and make it their primary account, half already have an account with a neo/challenger bank, and another third have two accounts.

Marcus Should See Strong Cross-Selling Success

Just over half of consumers with a Marcus savings account said they’d open a Marcus checking account when it launches. They were evenly split between those who would close out their current primary checking account and those who wouldn’t.

Marcus may also see strong interest among Apple Cardholders—roughly four in 10 of them intend to open a Marcus checking account.

Who Should Be Worried?

A Financial Brand article warned that Marcus is a “digital bank that should keep rivals up at night.”

For sure. But there’s one rival in particular that should be paying attention.

Of the consumers who said they’ll open a Marcus checking account and close out their current primary checking account, 46% call Bank of America their primary bank.

The megabank still has to worry about direct displacement from the consumers who intend to open a Marcus checking account but leave their existing primary account open. Among those consumers, nearly four in 10 are Bank of America customers.

Interestingly, there’s one group of potential competitors who might not have to worry: Other neo/challenger banks. Of the 3% of consumers who say they have their primary checking account with a neo/challenger bank today, not one of them said they intend to open a Marcus checking account.

It’s Not That Consumers Lie....

If there’s one idea you can take to the bank, it’s that consumers don’t always do what they say they’re going to do when answering a survey.

So it’s a good bet that not all of the 8% of consumers who said they’ll open a Marcus checking account when it launches will do so. But it is a good bet that some portion of the 16% who said they’ll consider opening an account will.

That said, it’s hard to believe that so many consumers would express interest in the Marcus checking account with no knowledge of fees, rewards, or other benefits and features of the account.

It’s not like there’s pent-up dissatisfaction among would-be Marcus applicants: They’re far more likely than other consumers to say their current primary bank makes it easy for them to manage their lives, helps them make better financial decisions, and provides products that meets their needs.

The Bigger Threat to Legacy Banks and Credit Unions

While Bank of America would potentially be the bank hardest hit by a Marcus checking account, the broader threat to legacy institutions is Marcus’ potential to cherry pick the cream of the customer crop.

This hasn’t been an issue for the legacy banks. To date, the leading neo/challenger, Chime, has attracted mostly lower-income consumers.

The impending threat of a Marcus checking account may change that scenario.

Another factor supporting the warning issued by the Financial Brand article is Goldman Sachs’ willingness to put big money into marketing Marcus.

While many other neo/challenger banks think they can rely on word-of-mouth referrals to fuel growth, Goldman Sachs (by my estimates) spent $80 million on Marcus-related marketing in 2017 and more than $100 million in 2018. That’s roughly what a $100 billion (in assets) bank spends on marketing all of the products it offers.