LAS VEGAS–Goldman Sachs has had a mixed record in moving into retail banking, with its Marcus brand posting billion-dollar losses, while it has seen some success in partnering with Apple and General Motors in different ways. During a meeting here one executive with the company offered a perspective on what the bank has learned and where it is headed.
Stephanie Cohen, global head of Goldman Sachs Platform Solutions and who has been with the company for 24 years, responded to questions during a Q&A held here as part of the Fintech Meetup conference. Moderating the session was Jon Lear, president and cofounder of Fintech Meetup.
Here is a look at what was discussed:
Lear: What is Goldman Sachs global platform solutions and what is the vision?
Cohen: At the highest level it’s a corporate and institutional business. It’s a B2B business. But we do have millions of consumers as our end-consumers. We are trying to embed financial products in the ecosystems of our customers and to build that in a developer-centric way.
So, what we're focused on inside platform solutions is using those competitive advantages. The first one you mentioned was transaction banking and we're doing payment and liquidity solutions for large corporates. We also serve small and medium sized businesses by working with platforms like Stripe. We then have the capability to embed things like credit cards and point of sale loans into the ecosystems of large consumer-facing brands and, actually, a network of thousands of home improvement merchants.
Lear: When you step back in your role as chief strategy officer, what gave you the confidence that you thought Goldman could win in those businesses?
Cohen: I think that's a really important point, which is you’ve got to focus on what you're good at and I think transaction banking is a really great example of us doing that.
I've been (at Goldman) for a quarter of a century, but we've been around for more than a century and we have amazing corporate and institutional relationships. We have a leading global banking and markets franchise. We looked at this and asked how do we leverage those capabilities and enter markets in a technology first way?
Transaction banking is a really good example. This is a market that's been around for a really long time, but the technology tends to be a bit antiquated. What we have found is that by having those relationships and having access to the clients and then showing up with a better technology solution, we could actually penetrate a market that has a really long sales and implementation cycle.
Lear: Tell us about your technology approach and the talent piece?
Cohen: That business is cloud native. There are a lot of businesses where that's not a big thing, but that's a big thing in this business because doing the implementation actually takes a really long time. I think it's harder for other people to do so in transaction banking.
We go to market in two ways. We go through large corporates. These are the types of companies that we've had relationships with a long time, and then we go through platforms. American Airlines last year chose us as their primary payables bank and we will start integrating with them later this year. We're able to operate at the scale of American Airlines.
‘Proof is in the Pudding’
At the same time, we're partnered with Stripe on a developer-centric solution and we have been able to build something that the Stripe developers love. This is the proof is in the pudding in terms of our technology being something that can scale with our really large clients, but also with what the developers really demand.
This gets to one of the things that I think is really important, which is the developer centricity.
Lear: How do you mesh the two cultures, that of a traditional bank culture and that of an entrepreneurial culture.
Cohen: I actually think the entrepreneurial spirit is at the essence of Goldman Sachs; it's been at the essence of Goldman Sachs for a really long time. But the thing we have to do in order to be competitive in our business is to be the employer of choice for engineers, and by the way that means the employer of choice for engineers not just in the tech and financial services industry, but more broadly.
It’s not just what is our business plan and how are we going to grow the business, but also how are we going to recruit and retain engineers and give them opportunities across Goldman Sachs? We're quite focused on making sure we have the right tools for our engineers so that they enjoy working at Goldman Sachs.
I also think they're quite excited to work in business-like platform solutions, where the end client is an engineer, so they're not just the back office part of what we're doing, they're absolutely the front office.
Lear: What are the advantages of being cloud native?
Cohen: It’s so much easier to integrate and upgrade. For us, it’s really about how to navigate a complex environment and respond to what our clients want. We want to be helpful to them. Helping them grow their businesses is in our DNA.
But if you're going to run a platform business you need to upgrade the platform as you do that, rather than doing a bunch of bespoke integrations. By being on the cloud we're able to have technology that's significantly more flexible
Lear: One thing unique about Goldman is its approach in the area of partnerships. You take a different approach.
Cohen: We formerly worked with partner banks and still do. We think partners are incredibly important. I'll talk about partners in two ways. One, we really are focused on having like-minded partners and two, we're focused on it being win-win.
What I mean on like-minded partners is we want to partner with brands that are focused on doing what's best for their own customers, the brands that you love and you trust and you want to experience. It's not by accident that our two primary partners in consumer platforms are brands and companies that you interact with every single day. The two of them together touch more than a third of the U.S. population every single day. We believe there are brands…trying to help their customers live better lives
The Second Thing
The second thing that we want to do is we want to have win-wins, and I think the Stripe partnership is a really great example. With Stripe, we take that capabilities we offer a really large corporates and we offer them to their small and medium-size businesses. Goldman Sachs doesn't have access to small and medium-size businesses, but Stripe does. But Stripe doesn’t the world class transaction banking capability, and so it's really a win-win from both of our perspectives.
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