One of the most secretive, powerful giants in banking is going a little more open source.
If you’re a client of Goldman Sachs, the firm will begin giving you unprecedented access to its internal tools and tricks, according to The Wall Street Journal. The proprietary platform (its “special sauce” for trades) gives clients like hedge fund managers and traders insights and analysis of risk management. The Journal calls Goldman’s unexpected move a “major shift.”
In sharing institutional risk-avoiding tactics, Goldman engages in some risk of its own. Eventually, rather than utilize Goldman’s system, clients could seek to mimic it in their own trading operations and walk away. But Goldman is hoping clients use the strategies to make better moves—still through Goldman. This is a value-add play for customers, and the $40-billion-in-revenues firm (No. 76 on the Coins2Day 500) has its fingers crossed that the move will bring new clients, not cost it existing ones.
The surprising step is the brainchild of Goldman’s chief information officer R. Martin Chavez, who took that role in 2013.
In the wake of new regulations like the Volcker Rule, and a sea change in how all financial firms operate thanks to the Internet, Goldman and other money-handlers are looking to update their technology. Everyone from nimble financial-tech startups to big payment processors like MasterCard have created open APIs (application programming interfaces) that allow developers to use their tools.
The Journal reports that many on Wall Street “are skeptical Goldman will give clients complete access to its in-house tools.” Indeed, the firm that racked up $1 trillion in deals last year, that worked with Uber on a massive $1.6 billion funding round this year, that Rolling Stone famously labeled the “Great Vampire Squid,” whose chief executive Lloyd Blankfein became a billionaire this year—that company is unlikely to suddenly give away all its secrets.