How Goldman Sachs Is Becoming a Technology Company

Editor’s note: This article was contributed to Cloud Wars by Jiri Kram, a solution architect who studied Fintech at MIT and specializes in cloud computing and blockchain. He is a highly respected commentator on LinkedIn, where he originally published this piece on May 12. This article marks Jiri’s fourth appearance on Cloud Wars; you can see his first three Cloud Wars articles here, here and here. While Jiri is a good friend of Cloud Wars, the views expressed are his, and do not necessarily reflect the views of Cloud Wars. And since today’s article from Jiri is about Goldman Sachs, Jiri and I want to disclose that Jiri at one time worked for Deutsche Bank.

“They are always one step ahead.” That’s a favourite explanation, when you speak those close to Goldman Sachs—and even their rivals. What makes the firm so unique? Let’s dive in and see how a 151-year old bank is becoming a technology company.

Play it again, DJ D-Sol

Once upon a time in New Jersey, a man is looking down from a window on a scene under the tower. Crowds have gathered to protest against the might of banks like Goldman Sachs. He sees a changing world which dislikes Goldman Sachs and blames it for the financial crisis. He knows his firm has an image problem. Something has to change. One day, he will be able to take his big vision to build a different kind of bank. 

The miracle named Marcus

Fast forward to 2016. Out of nowhere, a new Goldman Sachs appeared. It was no longer the old ruthless investment bank as seen during a Senate committee hearing. New Goldman Sachs was about returning to its core values, to the days when the Goldman Sachs name symbolised reliable, customer-focused services. It was a reinvention of an age-old concept of truly personal banking experiences. But this time, they would happen at a scale never seen before. And so while rivals were carefully observing the strange world of fintech, Goldman Sachs jumped straight in and created Marcus. When Marcus was launched, many pundits couldn’t believe how outlandish Goldman Sachs’ ambition was; 2 billion AUM in the same year! Some laughed. Today, Marcus has 60 Billion AUM and counting, and no one is laughing anymore. 

The card that didn’t fall far from the tree 

Every success fuels the drive for the next one. Marcus was just a start, Goldman Sachs knew, and so they needed the next step. And so, one year ago in April 2019, something unimaginable happened. Apple launched the Apple Card, powered by Goldman Sachs. What? An investment bank is launching a credit card? People couldn’t believe it. Those who did quickly understood this was the next stage; Marcus was just a first move. From now, Goldman Sachs was officially in the retail banking game, entering as the default card for the most popular consumer device in the world—iPhone and the whole Apple ecosystem. Just as it was with Marcus, many poked fun at Goldman Sachs for this move. Until statistics revealed the truth: by November 2019, Apple Card users received $10 billion in credit from Goldman Sachs. 

Marcus’s “one more thing”

People watching Andy Jassy’s keynote at Reinvent 2019, the largest AWS conference in the world, were surprised when modern dance music started playing and a man whom Andy introduced as a part-time DJ took the stage. Then the secret DJ revealed his real name: David Solomon CEO of Goldman Sachs.

After a brief intro, he explained the role of technology in the firm’s strategy and introduced, among other things, an API portal for developers, saying Goldman Sachs sees developers as customers. The first API was Marquee, a tool for institutional investors, next of course, Marcus. Then he mentioned collaboration with Apple on Apple Card and explained that all these fantastic services are built because of cooperation with AWS. Before Solomon left the stage, he hinted at the product next in line. The next Goldman’s target: GTB (Global Transaction Banking). The only question is how much out of the $1 trillion in transaction revenue Goldman Sachs will capture. If things go as smoothly as they did with Marcus, the world might change forever. 

Now, back to you, DJ D-Sol.

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