Two new digital banks unlikely to impact Irish market as inertia holds sway, analysts say

Irish Independent

15-05-2025

Household deposits in Ireland earn an average of 0.13pc a year in interest, but online accounts offer as much as 2.5pc
Moves by two international banks to set up retail operations in Ireland may have a limited impact on the market, due to what was described as 'customer inertia'.
Wall Street giant Goldman Sachs is reported to be in talks with the Central Bank of Ireland about setting up its digital bank, Marcus, in this country.
And Ireland got its first new bank in more than two decades last month, when Avant Money revealed it is now a fully licensed bank in this market.
It is keeping its Avant Money name for now, but is expected to change to the Bankinter brand in time. It is owned by Spain's Bankinter.
Avant Money already offers mortgages, credit cards and personal loans in this country, but will now add deposits to its offering.
It is expected to launch deposit products for savers later in the year.
Irish households held €162bn in deposit accounts as of March 2025
Goldman Sachs Group's move to set up its retail bank Marcus here could shake up the country's heavily concentrated market, but savers are reluctant to move money to digital banks.
Irish households held €162bn in deposit accounts as of March 2025.
About 86pc of this was held in current or overnight accounts – down from a peak of 94pc in late 2022.
Household deposits in Ireland earn an average of just 0.13pc in interest, compared with 0.32pc in the euro area, according to Central Bank of Ireland data.
The low offerings have prompted scrutiny from politicians about banks' failure to pass on rate increases.
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In the UK, Goldman Sachs' Marcus offers an interest rate of 4.3pc to British depositors.
In this country, international banks Revolut, N26 and Bunq and platforms such as Raisin and Trade Republic have been active offering deposits to Irish households for some time.
But banking analysts said the presence of more digital banks here is unlikely to shake up the savings market.
Analyst Denis McGoldrick of Goodbody said inertia and an unwillingness to trust digital-only platforms meant the bulk of the €162bn in households savings were held in AIB, Bank of Ireland and PTSB.
Irish households retain significantly larger balances in current accounts
In a note to investors, Mr McGoldrick wrote: 'Goldman Sachs are the latest retail bank to eye the Irish deposit market, with Bankinter's Avant Money set to launch their own offering in the coming months.
'While the deposit market is perceived to lack competition, the reality is that there are a host of options available for consumers beyond the three listed banks, particularly through the online platform Raisin which gives access to a wide range of European institutions.'
He wrote that a 'combination of customer inertia and unwillingness to trust digital-only platforms has resulted in only around 2pc of household deposit being held outside the three pillar banks.'
Analysts at Davy Stockbrokers Diarmaid Sheridan and Thomas Ryan said the banking market has been consolidated, but competition has had 'with limited impact to date'.
'Compared to euro-area averages, Irish households prefer to retain significantly larger balances in current and overnight accounts, with only small amounts of deposits held outside the three domestic banks,' they said.
'Goldman Sachs' digital bank, Marcus, may be well resourced, but it will likely be some time before any prospective plans come to fruition; other banks will launch in advance, with Bankinter's Avant Money set to launch savings products later this year.'
Revolut launched savings products for savers here last year, but has only attracted around €1bn in deposits.