Goldman Sachs, through a partnership with Amazon Web Services (AWS), has launched a financial data management and analytics service to help clients crunch data to extract business value.
The announcement is part of a larger trend where key players in vertical industries — in this case, financial services — partner with hyperscalers to offer cloud services.
Goldman Sachs’ new Financial Cloud for Data targets hedge funds, asset managers, and other institutional clients who face growing amounts of market data in a digital-first age.
The new service will allow financial services firms to use Goldman Sachs’ own artificial intelligence (AI) tools and applications to crunch data for deeper business insights. AWS will supply the computational power of its cloud services to host the Goldman Sachs applications.
The financial services industry is typically skittish about sharing any data outside a corporate firewall, as any exposure can damage a firm's reputation and result in heavy regulatory and legal repercussions.
Over the past several years, however, more industries — among them healthcare, manufacturing, and financial services — have grown more comfortable with having data processed outside of corporate firewalls to glean business value.
“The question used to be why would we use cloud? And now, it’s why wouldn’t we use cloud?” said Jason Malo, a director analyst with Gartner. “We see banks offering [banking]-as-a-service and they act as a facilitator on which they can create a platform on which others can collaborate."
AWS has partnered with enterprises in other industries, such as Volkswagen and other automotive manufacturers, to supply cloud services and consolidate software platforms across branch and remote offices.
In 2020, Microsoft for Healthcare launched cloud services for healthcare providers to improve clinical and operational data insights.
Partnerships between cloud technology providers and financial services is becoming more commonplace as the economies of scale of a cloud provider enable lower costs and faster deployment when compared to launching private cloud services. In 2019, for example, IBM partnered with Bank of America to create IBM Cloud for Financial Services.
Additionally, newer banks rely on the infrastructure of established financial institutions to launch services they otherwise couldn’t afford because of capital costs for staff and infrastructure, according to Malo.
For example, mobile banking app provider Chime uses middle and back-office services provided by The Bancorp Bank or Stride Bank, N.A. Chime is essentially a tech company using other institutions’ banking software.
“We’ve seen large organisations — digital technology giants — try to offer financial services in the past: AWS, Facebook, Walmart, and Google. All of them tried to do things around financial services,” Malo said. “We’re not saying they can’t, but in those cases, regulators looked at them and say, ‘How are we going to regulate them?’
“So, in this case, you can see AWS and Goldman Sachs’ pedigrees working well together,” he said.
The growing dependence on IoT and the adoption of digital technology (for digital transformation) has led to an explosion of data across organisations; this is driving the need to derive business intelligence from the enormous data sets coming in from a plethora of sources.
Organisations have a choice: Build their own private cloud infrastructure to consolidate data pools to run data analytics against, or outsource that function to hyperscalers.
With digital transformation initiatives, data is generated in different locations of an enterprise. Streaming all the data to a central repository is expensive, both in terms of bandwidth and data center resources, according to Leo Gergs, an analyst with ABI Research.
“That’s why [public] cloud is becoming more important and why more enterprises are moving in that direction,” Gergs said. “That’s why hyperscalers are coming in. They offer appealing business models to enterprises because they can offer a lower cost of entry. These are consumption-based models that reduce the level of capital expenditure by enterprises and so they only pay for the compute resources they use.”
Developed during a two-year collaboration between Goldman Sachs and AWS, the GS Financial Cloud for Data service will let clients discover, organise, and analyse data in the cloud. That information can then be used to gain insights and make better informed investment decisions.
“This new collaboration between GS and AWS will enable us to derive unique insights from our proprietary data in a private and secure environment, while leveraging the scale and innovation speed of the cloud,” Vlad Torgovnik, CIO at investment firm Millennium Management, said in a statement.
Advances in data and technology are rapidly transforming the financial services industry, as digital transformation initiatives change business processes and customer experiences. That transformation is forcing developers in investment firms to spend significant time and energy customising various tools to manage, interpret, and analyse financial data at scale, according to Goldman Sachs.
The 152-year-old investment bank believes Amazon's cloud-based analytics engine could also make advanced quantitative analytics more accessible across global markets.
“Institutional clients will benefit from decades of Goldman Sachs experience to address data management and analytics challenges,” the firm said in its announcement.
Goldman Sachs Financial Cloud for Data extends the bank’s front-office analytics tools, such as PlotTool Pro, a time series analytics tool, and GS Quant, the firm’s Python toolkit.
Components of Goldman Sachs Financial Cloud for Data are also compatible with Amazon FinSpace, an AWS service aimed at combining and analysing data from multiple sources, such as position data from data warehouses or data lakes.
The collaboration with Goldman Sachs also gives AWS specialisation it otherwise wouldn’t organically have because financial services requires a high level of compliance and security acumen.
“There’s a trend toward specialisation of the cloud and part of that is an aspect of the maturity we’re seeing in these new services,” Gartner’s Malo said. “There’s a nice synergy there.”