Goldman Partners With Amazon To Launch New Cloud Computing Platform
Goldman Sachs and Amazon are launching their most ambitious collaboration yet: a new cloud computing service geared toward Wall Street firms to help them with high-frequency trading and other practices.
And all these firms need to do is agree to entrust their entire back-end IT setup to the Vampire Squid to access what Amazon is touting as one of the fastest and most useful back-end systems available to Wall Street firms looking to transition on to the cloud.
The new product – the result of a two-year collaboration with Amazon – will allow buy-side and sell-side firms to access all of Goldman’s tools for quickly analyzing market data while enabling clients to set up high-speed trading strategies. Instead of simply relying on Goldman for prime brokerage services, hedge funds could soon outsource most of their IT setup to Wall Street’s most powerful investment bank, with a critical assist from Amazon.
CNBC said the collaboration is in line with Goldman’s attempt to use technology to better serve clients of the firm’s markets division.
“Clients of the firm will get access to our decades of experience and data aggregation that should enable them to enhance their business decisions, both from a speed and efficiency perspective,” Solomon told CNBC last week in a phone interview. “We think that adds to our position as a leader in the marketplace.”
The new service, called GS Financial Cloud for Data with Amazon Web Services, will purportedly allow buy side firms to save time by allowing developers to focus on what matters – making sure trades are filed and filled as quickly as possible, rather than wasting time wrangling data sets and leaning on a patchwork of legacy software to analyze said data. It will also “lower the barriers to entry” for firms to use advanced quantitative trading techniques, Goldman said.
To be sure, using Goldman’s IT platform will also help the Vampire Squid monitor the activities of clients, granting Goldman the transparency to avoid any overlevered time bombs like Archegos.
The industry is struggling to keep up with the rising technological demands of the latest investment techniques, according to Goldman co-chief CIO Marco Argenti.
Argenti added that “if this existed, we would have used it…but we had to build it for ourselves. All you need to do is assemble the interface and integrate it with your application and then everything else is kind of taken care of for you.”
Amazon and Goldman unveiled the new product at the AWS: Invent Conference in Las Vegas on Tuesday. But this isn’t the start of the relationship between Goldman and Amazon. The two company’s have been collaborating for more than a decade. Goldman leaned on Amazon to help build the back end of Goldman’s “Marcus” consumer finance business, along with its Apple Card, which was released a few years after Marcus.
Adam Selipsky, who rejoined Amazon as head of AWS earlier this year, said the idea for a collaboration with Goldman arose from conversations with other financial services customers.
“We have a lot of customers who ask us to help them do what Amazon did with AWS,” Selipsky said in a phone interview. “When we started talking about Goldman’s capabilities around data and around analytics in the financial services realm, the ideas just sprang up pretty rapidly about collaborating together.”
Goldman CEO David Solomon said the new offering will “enhance the experience” of Goldman’s institutional clients and that “the way we get paid for that is we get more of their wallet share because the overall experience and services we provide gives us more mindshare, more opportunities to trade with them, to finance them and do things like that,” Solomon said.
It’s only the latest major cloud deal involving a Wall Street player as firms with complicated trading operations look to the cloud to solve their problems.
Hey look at that. Another cloud deal.
CME – Google
Nasdaq – Amazon
Goldman – Amazon https://t.co/FAUlOKQM6D
— Patrick Rooney (@patrickrooney) November 30, 2021
Put another way: once Goldman is running the buy side’s back end, firms will effectively be forced to trade with Goldman (not to mention the treasure drove of data and information that Goldman might glean from the arrangement). Nothing’s free on Wall Street.