Goldman Sachs, one of the world’s iconic investment banks, is jumping into the greatest growth market the world has ever known by creating a “Financial Cloud” that it says will trigger an “unprecedented opportunity to extend the reach of financial services.”
As far as I can tell, Goldman Sachs has not publicly announced its Financial Cloud so I guess this qualifies as what old-timers, like me, would call “a scoop.” But to create such a cloud, Goldman Sachs does indeed need software engineers and developers to build the contraption, and I recently came across a recruiting ad looking for world-class players to join the company and create this new cloud thing.
This is yet another example of an escalating and tradition-shaking trend in which some forward-looking business customers are morphing from consumers of software created by the traditional software industry to providers of cloud applications and solutions sold to either businesses or consumers.
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A recent example came from American Airlines and Microsoft, which I explored a few weeks ago in a piece called Microsoft’s Airline Mega-Deal Showcases the Co-Creation Boom. In that deal, American’s development team partnered with Microsoft to create a mobile app for frontline workers designed to get more planes into and out of their gates on time.
In the case of the Goldman Sachs Financial Cloud, the ambition and the stakes are on a much grander scale. For example, just take a gander at the graphic accompanying the Goldman Sachs online recruitment ad under the headline Pioneering the Financial Cloud:
Here’s how that ad described Goldman Sachs’ intentions for its Financial Cloud — and those intentions are certainly not modest. Below the excerpt, I offer my own views on the stunning magnitude of this development.
GS Engineers are at the forefront of innovation and transformation in the financial services industry. Our engineers are working to externalize our financial services in the form of a Financial Cloud – which is designed to ultimately turn our engineering investments from costs into revenue streams.
We offer a platform that provides Goldman Sachs’ banking, trading, and risk capabilities as infrastructure that our clients can build upon. The Financial Cloud allows consumer brands and corporations to bring our financial services to their customers in their ecosystem – without the need for those companies to invest in additional technology. We’ve provided financial services through our Transaction Banking business and more. Plus, we’ve partnered with Amazon and Walmart to offer small business loans* to sellers on their marketplace platforms.
That’s quite a vision for a new cloud product, particularly coming from a company that was founded 153 years ago to cater to the banking needs of wealthy individuals and institutional investors. Here’s what I think it means:
- “Our engineers are working to externalize our financial services in the form of a Financial Cloud.” So, this is certainly not some internal-only private-cloud project: rather, Goldman Sachs is unequivocally venturing into the Cloud Wars.
- The Financial Cloud “is designed to ultimately turn our engineering investments from costs into revenue streams.” So, yet again, we see the power of the cloud as a Re-Imagination Machine and as a growth accelerator.
- The Financial Cloud is “a platform that provides Goldman Sachs’ banking, trading, and risk capabilities as infrastructure that our clients can build upon.” As the cloud helps business leaders create new ways of looking at the world and new business models to serve that increasingly digital world, I wonder how some Goldman Sachs bluebloods think about the rather gritty reference to the company’s crown jewels — banking, trading, and risk capabilities— as “infrastructure”? But such is the new language of our time in the world of digital business.
- “The Financial Cloud allows consumer brands and corporations to bring our financial services to their customers in their ecosystem – without the need for those companies to invest in additional technology.” So, yet again, the cloud shows its unique ability to become a transformational delivery vehicle for services and capabilities that could not, without the cloud, have escaped the very traditional boxes in which they were created and have grown.
- “Plus, we’ve partnered with Amazon and Walmart to offer small business loans* to sellers on their marketplace platforms.” Now hold your horses for a second: did iconic Wall Street upper-crust Goldman Sachs just admit — publicly! — that it has struck a partnership with, ahem, Walmart? That, that “mass merchant” that populates the center of the country and is not exactly perceived as the type of company the upper class keeps? Well yes, indeedy-doody-daddy, that is precisely what Goldman Sachs just did. If anyone wanted a further indication of just how aggressively some world-class businesses are willing to change and transform and shatter traditions and norms to meet the new demands of the acceleration economy, then the Goldman Sachs/Walmart pucker-up certainly provides that proof.
So, a quick recap:
- Goldman Sachs is creating a Financial Cloud that it will sell to businesses and that will offer a range of financial services and expertise. The Upshot: Goldman Sachs is a cloud vendor!
- The launch of that cloud is expected to turn some of Goldman Sachs’ IT spending from costs into revenue streams. The Upshot: IT is increasingly becoming a revenue driver rather than a measly cost center that needs to be pulverized!
- Goldman Sachs is now describing as “infrastructure” the banking, trading, and risk-management capabilities that have built it into a highly regarded firm with a market cap of $97 billion, annual revenue of almost $60 billion, and 45,100 employees. The Upshot: reimagine your business rapidly and aggressively, or your competitors will make you wish you had!
- And, Goldman Sachs has embraced Walmart as a partner. The Upshot: we are entering a very different world in which what you did in the past can mean little or nothing in regard to what you need to do in the future!
If all that doesn’t rattle your timbers, I’m not sure what will.
But at the same time, such upheavals are becoming, if not quite yet the norm, then certainly far less unheard-of than they were just a year or two ago.
And in the Cloud Wars, you had better bet that trend is going to accelerate like a hog on ice.