Goldman Sachs had 600 traders in New York City making markets in US stocks in 2000.
That number is down to fewer than 10 today.
The statistic is one of several nuggets from a Credit Suisse report on how the bank uses technology, following a conversation with chief information officer Marty Chavez.
The analysts estimate that Goldman spends $2.5 billion to $3.2 billion on technology each year, or about 7%-9% of revenue.
This has big implications for the bank’s staff. In some ways, technology can make their lives easier. Last month, the bank announced a new initiative designed to make the lives of junior investment bankers easier — by letting technology do more of the grunt work for them.
But technology might also soon replace more workers. The note said (emphasis ours):
Embrace Disruption — management of Goldman is very much of the belief — and we can’t argue with this — that there will be far more value ascribed to those who embrace new, albeit disruptive, technologies. This disruption can be people “destructive” at times, but it can be far more destructive to be left behind in a business poised for profound change. Importantly, these changes may be disruptive, but also both relationship and profit margin enhancing, through delivery of a better product to Goldman’s clients.
There’s ways for Goldman to be more efficient with its tech-spending. About 30% of the annual expense goes for maintenance, which covers things like communications, market data expenses and software licensing. The bank wants to get that down to 10%, which is more comparable with software companies.
That would free up $600 million to $800 million, which could either go back to the bottom line, or be reinvested strategically, Credit Suisse estimates.
These strategic investments could include things like investing in blockchain technology that underpins the use of bitcoin, with the Credit Suisse analysts noting that Goldman Sachs is “very interested in the use of Blockchain/distributed ledger technology.”
Other investments include Symphony, the instant communications platform out to displace Bloomberg’s terminal, and Goldman’s Marquee app, which delivers data and analytics to staff and is now being rolled out to clients.