In Goldman Sachs Group Inc’s latest move to bolster its street cred as a cool, tech-savvy bank, it is holding its annual shareholder meeting in San Francisco on Thursday.
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 mould 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 grey-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 $US50 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.
That group recently chaperoned Goldman’s portion of a $US50 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 $US66 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 $US83 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 per cent 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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