Earlier this year Goldman Sachs launched the first new, completely new, transaction banking service in the USA in 30 years in which they claimed that “We’re helping clients build a treasury of the future and powering software partners to enhance their offerings. Our mission is simple: provide a global transaction banking platform that is nimble, secure, and easy for clients to use and for partners to connect to.”

Starting from scratch

Goldman Sachs literally started from scratch with no legacy systems and no batch systems and processes holding them back. The whole project was about being different with all the systems on the cloud, all real-time and all API driven. Working with several partners – including GTreasury and SAP Ariba – they were able to deliver a very different range of transaction banking services using fully integrated APIs. The services include:

• Self-service client onboarding and account opening (in less than an hour) as well as secure mobile authentication
• Virtual account-based liquidity management, e.g. it as easy to set one million accounts as it is to set up one
• Payment services including Intelligent Routing and Swift GPI
• Escrow services.

All with rich analytics and a simple and transparent charging structure.

Also, and vitally, they are not trying to be all things to all corporates. They are just focussing on, as Eduardo Vergara, Head of Product and Sales, Transaction Banking, Goldman Sachs puts it, “Offering a differentiated real-time digital solution suite which we expect to appeal to clients looking to streamline their banking infrastructure, to make treasury more efficient and to digitally transform.”

Further details of other partners are emerging. Volante recently announced that “It has been collaborating with Goldman Sachs Bank USA to provide the payments technology underpinning the bank’s recently launched transaction banking service.” Volante has also become a client of the platform.

Impressive early take-up

Goldman Sachs are targeting $1 billion in revenues and $50 billion in deposit balances in the first five years from the launch of its transaction banking platform. At present, the service is only being offered in the USA. Already, less than three months since the launch, some 200 corporates have signed up for the service. It has proved popular with the younger fintech companies, such as Volante, and also with older and more traditional companies. (Launch is planned for the UK and Japan next year.)

Terry Beadle, Global Head of Corporate Development, GTreasury, is not surprised by this level of demand, because he believes that “The GTreasury Goldman TxB integration delivers a faster, more economic and more transparent payments service without switching costs, change of operational workflow or new bank accounts.  It’s a clear winner.” 

Mark Smith, Global Head of Liquidity for Transaction Banking, Goldman Sachs believes that there are clear advantages from starting from scratch “With no legacy infrastructure, we can bring to market the very latest technology in a fraction of the time that it would take to update multiple old transaction banking systems – and at a fraction of the cost”

Competitor reaction

It is already becoming apparent that many of the other banks are not going to able to move fast enough to counteract the GS initiative. Some experts believe that it may take years for other major banks to react as they are going to have to start from scratch just like Goldman Sachs have done.

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CTMfile take: The problem for corporate treasurers is going to be how to integrate the new Goldman Sachs transaction banking service into their overall transaction banking solutions, not whether.