Barclays (BCS) is making a bid to attract more deposits from American consumers, but it will do so without resorting to typical brick-and-mortar branches.
Barclays U.S., a unit of the British parent's global retail banking division, on Monday will start selling online-only, high-yield savings accounts and certificates of deposit to U.S. customers.
"As the assets grow, it's important for us to start looking to diversify funding sources," Steve Carp, managing director of deposits for Barclays U.S., told American Banker in an interview Friday. "We have funding from our parent company and brokered CDs right now. We just see retail deposits as a way of continuing to build that out."
It is a slight expansion of the bank's U.S. consumer operations, which have been largely limited to a credit card business that specializes in selling cobranded credit cards with partners, including Barnes & Noble and Virgin America Airlines. Barclays does not have any physical branch locations in the country, and Carp said it is not planning to open any.
The new high-yield savings account, available on the Barclays website, will offer customers 1% interest on their deposits with no minimum balance or monthly fees. Barclays CDs, varying in length from 3 to 60 months, will offer rates between 35 and 175 basis points.
Carp said that Barclays "looked at what others are doing and what's been successful. And we did customer research as well. … What we found was important to consumers was, obviously, attractive interest rates," along with ease of access and an easy-to-use website.
The online accounts will also provide remote-deposit capture technology, allowing customers to make deposits by snapping a picture of their checks on smartphones.
That could be a particular draw for some consumers, says Dan Geller, executive vice president at research firm Market Rates Insight.
"When we look at Internet banks versus brick-and-mortar banks, obviously Internet banks had one major advantage, which is the cost structure. But they had one major disadvantage and that is accessibility," says Geller.
Barclays has "learned from the others what they need to do to mitigate some of those disadvantages. One of them is to overcome the accessibility disadvantage for deposits" with remote deposit capture, he adds.
Geller notes that ING Direct, "one of the pioneers" of the online-only account, just introduced remote deposit capture late last month. Capital One (COF) closed its deal to acquire ING Direct in February.
Before remote deposit capture, online-only savings accountholders would need to deposit checks in a linked account with another bank and transfer the money or mail in a check directly to the bank, which is less efficient, says Geller.
Barclays' Carp said that customers will need to link to another bank account as part of the sign-up process, but they will then be able to use the remote-deposit capture feature to send money directly to their account.