Goldman Sachs unveils Amazon-backed cloud service for Wall Street trading firms

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Goldman Sachs is entering the cloud computing business.

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CNBC has learned exclusively that the bank is opening up access to its repository of market data and software tools to hedge fund and asset managers in an offering designed in conjunction with Amazon’s cloud division.

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The move, the result of a two-year collaboration with AWS, puts 152-year-old Goldman in the unusual position of being a provider of cloud services to Wall Street, according to executives from the two firms. It’s part of Goldman CEO David Solomon’s push to use technology to better serve the clients of the firm’s markets division, a trading juggernaut that has helped drive the firm’s results this year.

“The firm’s clients will have access to our decades of experience and data aggregation, which should enable them to enhance their business decisions from both a speed and efficiency standpoint,” Solomon told CNBC in a phone interview last week. “We think it adds to our position as a leader in the market.”

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The new service, called GS Financial Cloud for Data with Amazon Web Services, will help asset managers save time by allowing their developers to focus efforts on trades, not the time spent scouring for data sets and Leaning on the patchwork of legacy software to analyze them, the companies said. Goldman said it would “reduce barriers to entry” for firms to use advanced quantitative trading techniques.

According to Marco Argenti, co-chief information officer at Goldman, the industry is struggling to keep up with the growing technological demands of the latest investment techniques. The last decade has seen the rise of quantitative trading firms that have soaked up assets, while traditional hedge fund managers including John Paulson and Leon Cooperman have closed to external investors.

A hedge fund client who wanted to chart the correlation between stock and currency exchange rates, for example, could take months to collect and clean the data and perform calculations with it, Argent said. Instead, by building applications on top of the data feeds and analytical tools used by Goldman, analysis can be done in minutes, he said.

“If it existed we would use it, but we had to build it for ourselves because there really isn’t anything like it on the market,” Argent said. “You just need to assemble the interface and integrate it with your application and then everything else is taken care of for you.”

‘working backwards’

the product, AWS re:Invent . expected to be unveiled on Tuesday the seminar In Las Vegas, there’s the latest sign of an unusually close relationship between the tech giant and the major Wall Street firm.

The relationship began more than a decade ago, when Goldman began porting parts of its computing workloads to the cloud, according to Adam Selipsky, who joined Amazon earlier this year as head of AWS. Had happened.

It’s been a fruitful relationship: Goldman leaned on AWS to quickly build out its Marcus consumer finance business in 2016 and its Apple Card operations three years later. Meanwhile, Goldman made loans to Amazon merchants and advised Amazon on its acquisition of Whole Foods in 2017.

Selipsky said, in discussions between the two firms, Goldman was eager to understand how Amazon took the computing services it initially built for itself and turned it into AWS. One technique Amazon taught Goldman was a concept called “backward working,” in which the tech giant writes a press release and FAQs before starting a project to convince managers of its importance, he said.

“We have a lot of customers asking us to help them do it with Amazon AWS,” Selipsky said in a phone interview. “When we started talking about Goldman’s capabilities around data and analytics in the financial services realm, ideas arose very quickly about collaborating together.”

Amazon pioneered the cloud computing category, which allows companies to rent computing power and a suite of services rather than operate their own areas of servers. This has allowed companies to speed up software cycles, helping them stay on top of evolving consumer demands. AWS now accounts for the lion’s share of Amazon’s operating profit.

‘explosively beneficial’

In recent years, Amazon has partnered with leaders from all sectors to build industry-specific cloud services in areas including manufacturing, health and life sciences. For example, Amazon is working with Volkswagen to build an industrial cloud Forum To help move 124 factories to a single software platform.

“If you take a step back, Goldman is not only a bank or a financial services provider, it is now also a software company,” Selipsky said. “We’ve been a software company for many years, figuring out how to uncover Amazon’s powerful capabilities in a way that’s explosively beneficial to customers.”

Officials declined to provide details about how Goldman and AWS would share revenue from the joint project, but Solomon told CNBC he saw it as a way to advance the firm with business clients. Goldman plans to monetize the service through trading and financing opportunities, he said.

“This is something that enhances the experience of our institutional clients and gives them access to our data and information,” Solomon said. “The way we get paid for it, we get more of their wallet share because the overall experience and services we provide give us more opportunities to do business with them, finance them and do things like that. provides.”

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