For the past few years, Goldman Sachs has been striving to become more developer friendly, and thus appeal to tech companies and other demanding corporate clients.
In 2019, the bank's then-chief information officer
Last month, the New York bank created a new division dedicated to providing embedded banking in a way that developers at tech and tech-savvy clients can embrace. The new group, called Platform Solutions, will build and embed cloud-based, developer-centric financial products and services in its corporate and institutional clients' ecosystems to help them better serve their own clients and customers, the bank says. The Apple Card and Apple savings account, which work with Apple Wallet, are examples.
The new unit combines the bank's Transaction Banking unit, the
Goldman Sachs CEO
The Transaction Banking, digital consumer banking (the group working on the Apple and GM relationships) and GreenSky platforms "have led to partnerships with a number of our clients such as Apple, General Motors, Stripe, American Express and Fiserv," Solomon said. "Through our relationships with Apple and General Motors, we already have the ability to access more than 100 million individuals in the U.S."
Its relationship with Apple has already been expanding, from the joint offering of the Apple Card in 2019 to the new savings account launched last month. The account lets users add funds through a linked banking account or directly from Apple Cash, a digital card in Apple Wallet that lets users send and receive money in Messages or Wallet. Money users receive appear on the user's Apple Cash card in Wallet.
Platform Solutions is meant to showcase Goldman's internal development talent.
"We have 11,000 engineers here, and we're doing some very, very interesting things as the world is changing and the world is evolving with technology," Solomon said.
Platform Solutions represents only 5% of the bank's revenue, Solomon noted.
"It's still small relative to Goldman Sachs," he said. "It's less than 5%, but we think it's an opportunity worth investing into as we continue to broaden the scope and scale of what Goldman Sachs can do for our clients."
Though it's relatively small, "it's planting seeds that may or may not pan out long term," said Mike Mayo, managing director and head of U.S. large-cap-bank research at Wells Fargo Securities. "It has a longer-term burn and longer-term payout. And this is analogous to their Silicon Valley division."
This is Goldman's approach to the digital transformation most banks are going through, Mayo said.
"The big picture here is the banking industry is transitioning from digital banking 1.0 to digital banking 2.0," Mayo said. "Digital banking 1.0 was about replicating transactions. Digital banking 2.0 is about creating new products, services, engagements and relationships that were previously unavailable in analog form. I see this as Goldman's attempt to be best-in-class digital banking 2.0 in the segments where they choose to compete. It's fascinating and it's something to be watched."
But Mayo doesn't see this as a "big needle mover" yet.
"I would downplay the significance of platform solutions for the next three years," Mayo said. "This is really about Goldman Sachs for years three to infinity."
Transaction Banking, the group that developed Goldman's corporate portal, has 425 active clients and more than $70 billion in deposits globally.
"I think Goldman Sachs entering the space a few years ago was really interesting," said Christine Barry, head of banking and payments insights and advisory at Aite-Novarica Group, referring to the Transaction Banking portal. "They have the benefit of a brand-new platform so they can learn from others. It's really open, so it easily integrates, and that's very important to the market right now."
One large company might want to be able to go to a bank portal like Goldman's and access their accounts and relevant applications from there, she said. Others may want to be able to start from an accounting, expense management or payment system and access their bank information from there, she said.
"Integration or more of a platform strategy is what we're hearing all of the financial institutions talking about now as a goal," Barry said.
Banks have been talking about providing a more integrated experience for years, maybe decades.
What's different now, according to Barry, is that APIs have advanced to a point that such integrations are truly possible.
The Platform Solutions group itself is new and untested, and industry watchers were unwilling to bet on its success.
"I'd say everything that Goldman is doing in Platform Solutions is a show-me story," Mayo said.
"In other words, we'll believe it when we see it."
