David Solomon, CEO of Goldman Sachs & Co., listens during the Milken Institute Global Conference in Beverly Hills, California, United States, Monday, April 29, 2019.
Kyle Grillot | Bloomberg | Getty Images
Goldman Sachs is embarking on cloud computing.
The bank is opening up access to its treasure trove of market data and software tools to hedge funds and asset managers in an offering designed with Amazon’s cloud division, CNBC exclusively learned.
The move, the result of a two-year collaboration with AWS, puts Goldman, 152, in the unusual position of being a cloud service provider for Wall Street, according to executives at both companies. It’s part of Goldman CEO David Solomon’s drive to use technology to better serve customers in the company’s markets division, a business juggernaut that has helped drive the company’s bottom line this year. .
“The company’s customers will have access to our decades of experience and data aggregation which should enable them to improve their business decisions, both from the point of view of speed and efficiency,” said Solomon told CNBC last week in a telephone interview. “We believe this strengthens our leadership position in the market.”
The new service, called GS Financial Cloud for Data with Amazon Web Services, will help asset managers save time by allowing their developers to focus their efforts on transactions, rather than spending time debating data sets. and draw on a patchwork of legacy software to analyze it, the companies said. It will also “lower barriers to entry” for companies to use advanced quantitative trading techniques, Goldman said.
The industry is struggling to keep up with the growing technological demands of the latest investment techniques, according to Goldman co-chief information officer Marco Argenti. The last decade has seen the rise of quantitative trading companies, which have absorbed assets while traditional hedge fund managers like John Paulson and Leon Cooperman have absorbed assets. firm to outside investors.
A hedge fund client who wanted to correlate a stock with exchange rates, for example, could take months to assemble and clean the data and perform calculations with it, Argenti said. Instead, by building apps on data feeds and analysis tools that Goldman itself uses, the analysis can be done in minutes, he said.
“If it had existed we would have used it, but we had to build it ourselves because there is really nothing like it on the market,” Argenti said. “All you have to do is put the interface together and integrate it into your application, and then everything else is sort of taken care of for you. “
The product, which was unveiled on Tuesday at AWS re: Invent conference in Las Vegas, is the latest sign of the tech giant’s unusually close ties to Wall Street’s main business.
That relationship began over a decade ago when Goldman began shifting some of its IT workload to the cloud, according to Adam Selipsky, who joined Amazon as head of AWS earlier this year.
The relationship was successful: Goldman relied on AWS to rapidly grow its Marcus consumer credit business in 2016 and its Apple Card operations three years later. Meanwhile, Goldman is providing loans to Amazon merchants and advised Amazon on its 2017 acquisition of Whole Foods.
During discussions between the two companies, Goldman was keen to understand how Amazon took the IT services it initially created for itself and turned them into AWS, Selipsky said. (Goldman’s developers called the effort the Alexandria Project, according to the companies.) One technique Amazon taught Goldman was a concept called “working backwards,” in which the tech giant writes a press release. and an FAQ before launching a project to convince managers of its importance, he says.
“We have a lot of customers asking us to help them do what Amazon has done with AWS,” Selipsky said in a telephone interview. “When we started talking about Goldman’s data and analytics capabilities in financial services, ideas sprouted quickly enough to work together.”
Amazon has pioneered the category of cloud computing, which allows businesses to lease computing power and a suite of services instead of operating their own server fields. This has allowed businesses to accelerate software cycles, helping them stay on top of changing consumer demands. AWS now accounts for the lion’s share of Amazon’s operating profit.
In recent years, Amazon has partnered with leaders across industries to develop industry-specific cloud services in areas such as manufacturing, healthcare, and life sciences. For example, Amazon works with Volkswagen will create an industrial cloud Platform to help move 124 factories to a single software platform.
“If you take a step back, Goldman isn’t just a bank or a financial services provider, it’s also now a software company,” Selipsky said. “We have been a software company for several years, seeking to expose the powerful capabilities of Amazon in a way that is of tremendous benefit to customers. “
Executives declined to give details on how Goldman and AWS will share the revenue from the joint project, but Solomon told CNBC he sees this as a way to further strengthen the company with commercial clients. Goldman plans to monetize the service through the trading and funding opportunities it will generate, he said.
“It’s something that enhances the experience of our institutional clients and gives them access to our data and information,” said Solomon. “The way we get paid for it is we get a bigger share of their wallet because the overall experience and the services we offer give us more mind sharing, more opportunities to do business. with them, fund them and do things like that. “