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 Goldman has been one of the top investment banks handling mergers
and IPOs for the tech sector since the dot-com boom of the 1990s.
But more recently, the bank has been trying to mold itself into a
tech firm of sorts, too.
Chief Executive Lloyd Blankfein has been saying for years that
Goldman, founded in 1869, is more of a cutting-edge technology
company than a gray-haired investment bank. Lately he's been putting
Goldman's money where his mouth is: The bank has led several
high-profile investments in startups that are disrupting the
financial sector and is taking big steps to shift more of its
business through electronic channels.
In just the past few weeks, Goldman has hired an executive to build
a digital lending platform, co-led a $50 million investment in a
bitcoin startup and launched a podcast called "Exchanges at Goldman"
in which senior executives talk about technology on Wall Street,
among other things.
"When you ask me...what might this technology be doing to disrupt
the industry or our company, it's a little bit of a funny sentence,
because we are a technology company," Blankfein said in the first
podcast this week.
On Thursday, the bank will hold its annual shareholder meeting at
555 California Street, an office building in downtown San Francisco
that houses several financial services tenants. It's the third year
in a row Goldman has held its meeting away from the East Coast.
Shareholders will decide whether to approve pay packages for senior
management, as well as Goldman's board of directors, including new
additions Mark Flaherty, the former vice chairman of investment
management firm Wellington Management Company, and former Goldman
fixed income co-head Mark Winkelman. Blankfein is expected to offer
some comments on the bank's financial performance, as well as its
focus on technology.
Of course Goldman is not the only Wall Street bank to notice how
technology is changing the world - all of its major competitors have
been talking a lot more about technology, spending a lot more money
on it and trying to win more business from tech clients. But Goldman
has arguably been the most aggressive in making strategic
investments and reshaping itself for a digital world. Roughly
one-quarter of its 34,400 employees now work in tech.
The person in charge of Goldman's technology efforts is chief
information officer R. Martin Chavez, a scientist by training who
developed trading systems inside Goldman before taking on his
current role. Under Chavez's tutelage, Goldman also has been looking
at ways to use technology for lending, compliance, risk management
and cost-cutting.
The bank has been doing this in part through a team called the
principal strategic investments group, which puts money into
companies that are disrupting the financial services industry.
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That group recently chaperoned Goldman's portion of a $50 million
funding round for a startup named Circle Internet Financial Ltd,
which uses technology to perform transactions without a middleman.
Goldman sources say the bank views the technology, called "blockchain,"
as a transformative tool for trading.
Last year, the strategic investments group also orchestrated a $66
million investment in a secure chat and data platform called
Symphony Communication Services Holdings LLC. Goldman executives
view the platform both as a way to cut costs from external
providers, and as a way to streamline communications.
Though Goldman has no branches or ATMs, it is planning to make
inroads into traditional lending though technology. It recently
hired Harit Talwar from Discover Financial Services to create a
digital lending business that can put its $83 billion in deposits to
more profitable use.
In a more familiar realm of banking, Goldman remains one of the top
two global investment banks handling mergers, stock offerings and
private transactions.
It competes head-on with Morgan Stanley in courting technology
entrepreneurs to take their companies public and manage their wealth
afterward. Goldman was ranked as the top underwriter for technology
public offerings last year, according to Thomson Reuters data,
capturing 18.4 percent of market share. Goldman advised on 26
technology mergers globally last year, the highest number of its
peers.
A sign of Goldman's tech savvy may come from its role – or lack
thereof – in taking two of the most high-profile tech companies
public.
Although Goldman did not manage Facebook Inc's disastrous IPO in
2012, it was a major investor in the social-media network before it
went public. Goldman did lead Twitter Inc's 2013 IPO soon after; its
top tech banker, Anthony Noto, left to become Twitter's CEO.
(Reporting by Olivia Oran; editing by Lauren Tara LaCapra and Leslie
Adler)
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