Goldman Sachs is to partner with American Express, the biggest global issuer of business charge cards in a bid to upgrade its digital cash management offering and give greater competition to Citigroup, JPMorgan Chase and other global banks dominant in the cash management market, according to reports.

A report by CNBC suggests that the move could help Goldman accelerate growth in its nascent business as users of corporate cards issued by Amex — the dominant player with relationships with almost 60% of companies in the Fortune Global 500 — will now have reason to switch to the Goldman product.

The report observes that cash management represents the commercial counterpart to Goldman’s better-known attempts to break into retail banking. That move was announced at Goldman’s first open day for
investors in January 2020, as part of CEO David Solomon’s plans to introduce more stable sources of revenue.

As it also notes, Goldman’s transaction banking business has already begun gaining traction. Solomon recently told analysts that the group had reached US$50bn in deposits by the third quarter of 2021, several years ahead of target.

Cloud-based platform

The Goldman platform is said to be based on cloud technology and employs algorithms to help decide which payment form is best to use — card, wire, or Automated Clearing House — to save companies time and maximise card rewards. It also offers greater visibility into the status of payments and levels of cash.

Executives from the two groups told CNBC that by integrating virtual card technology from AmEx into its platform, Goldman has automated the cumbersome process of sorting and paying bills to vendors and
suppliers.

Users can also access Goldman Sachs TxB’s Intelligent Payments Engine, which will route payments to a particular channel based on the buyer’s speed and cost preferences. 

Advantage over fintechs

“This a one-stop solution to a highly fragmented business-to-business payments landscape for large corporates,” said Hari Moorthy, Goldman’s global head of transaction banking. “It lets CFOs and treasurers have better financial planning because now you have a seamless way to track the flow of funds, irrespective of the payment rails used.”

Dean Henry, executive vice president of global commercial services at AmEx, added that “large companies in the Fortune 250 are dealing with big banks that tend to have legacy, more fragmented solutions that don’t provide the capabilities that Goldman Sachs and American Express can provide.

“There are fintechs attempting this style of solution, but [we] have the brand, the trust and the balance sheet to really help these big companies, and that’s what fintechs don’t have.”

The companies say the solution is already available to select clients, with a wider rollout planned for early 2022.