Goldman is making an attempt to interrupt into the $ 32 billion business that serves the most important corps
Hari Moorthy, Global Head of Transaction Banking at Goldman Sachs.
Source: Goldman Sachs
Goldman Sachs wants to help every company in the world become a bank.
According to Hari Moorthy, Goldman’s global head of transaction banking, the company just released software that allows customers to embed banking services into their own products to enter the $ 32 billion industry that manages cash annually for large companies .
Goldman is a decade late in the global cash management industry ruled by Citigroup and JPMorgan Chase, and hopes to overtake its competitors with a new approach to corporate bank accounts and cross-border payments. After building a new cloud-based system for accounts and payments, Goldman is publicly releasing software called APIs to enable customer programmers to build on the bank’s platform.
“We’re trying to create a new industry by integrating our services into their stores so they can serve their customers as if we had them,” said Moorthy in a phone interview. “Imagine a technology company that can use these APIs to build a solution for payments or deposits along with what they currently provide to that customer.”
The approach known as Banking-as-a-Service is inspired by what Amazon has achieved with its cloud business. Just as Amazon enabled a generation of businesses to take advantage of cheap computing power, Goldman’s use could fuel the proliferation of digital wallets and seamless payments across business and consumer markets.
“This is the business finance cloud,” said Moorthy. “The possibilities of what we can do here are practically unlimited.”
The strategy could help Goldman accelerate entry into transactional banking, an area where consumer technology has lagged behind in terms of usability and where customers are slow to switch providers. The move is part of CEO David Solomon’s broader expansion into corporate and consumer banking, a stable business that is expanding the company’s revenue base away from volatile trading and investment banking.
“There’s this butterfly effect that kicks in after you roll out,” said Moorthy. “It enables us to win customers from our customers and to integrate seamlessly into the structure of banks and companies.”
By connecting directly to Goldman’s corporate platform, customers can quickly open accounts and use the bank’s automated payment programs that they were the first to create for themselves.
Transaction banking, which officially launched for external clients in June, has raised $ 28 billion in deposits and more than 200 clients. Moorthy returned to Goldman Sachs in 2018 to lead the emerging endeavor after spending nearly four years at JPMorgan.
The top 10 companies generated $ 32 billion in transaction banking revenue last year, led by Citigroup, Bank of America and JPMorgan, according to institutional research firm Coalition.