GS Accelerate Focuses On Cloud, Digitization & Sustainability05.26.2021
Goldman Sachs’ Accelerate program, the internal innovation engine that identifies new businesses for the firm, is focusing on ideas that fall into one of three themes – the financial cloud, financial services digitization and sustainability.
Tanya Baker and Hasan Malik, co-heads of GS Accelerate, discussed the program on the Exchanges at Goldman Sachs podcast that was recorded on May 4, 2021.
Baker said choosing three themes was not easy but the areas of focus align with areas of interest that the bank has made public.
“Marco Argenti, our co-chief information officer, got on stage in 2020 at our Investor Day and publicly disclosed that the financial cloud is something that we’re working on,” she added. “It’s a new way that we can better serve our clients.”
She expects financial services digitization to continue for number of years as a many businesses have been around for a long time, pre-iPhones and pre-internet.
“There are still a lot of analogue businesses and opportunities for optimization, scale and more self-service,” said Baker.
She continued that sustainability is central to the bank’s purpose of advancing sustainable economic growth and financial opportunity.
“At GS Accelerate we’re seeking innovations that can increase scale, velocity and affordability for the incredibly ambitious but exciting commitments that we have made,” added Baker.
Goldman Sachs has announced One Million Black Women, an investment initiative of more than $10bn to advance racial equity and economic opportunity by investing in Black women over the next decade. The initiative has the goal of impacting the lives of at least one million Black women by 2030.
Two months ago, with our incredible partners, we launched our One Million Black Women initiative. Earlier this week our advisory council met for the first time to discuss the initial investments, share guidance, and chart our path forward: https://t.co/GynLqKrF5k pic.twitter.com/sq8bz095rc
— Goldman Sachs (@GoldmanSachs) May 21, 2021
Malik said the program follows clients and sustainability is top of mind across the board. “We’d love to get crowdsourced ideas on how to push that agenda further,” he added.
He continued that there is still too much paper in financial services which creates inefficiency, errors and frustration so digitizing analogue businesses has a meaningful impact for clients.
“The financial industry has been a little bit late to the game in the cloud but we have aggressive plans,” added Malik. “We don’t just want to create on the cloud for our own clients, but create capabilities that our partners and clients can use for their end consumers.”
Baker explained that Goldman Sachs has always prided itself on a culture of innovation and entrepreneurship. However, new ideas that were either across divisions or multiple businesses, or just very new, did not have an obvious home.
“They didn’t really have the right place to be validated and read through for us to be able to see if there was a new business opportunity there,” she said.
In addition, giving employees the ability to pitch an idea, and for the firm to be able to evaluate whether the business is viable and an opportunity to better serve clients is a powerful concept.
“GS Accelerate is essentially a platform for anyone at Goldman Sachs, regardless of tenure, seniority geography title,” said Baker.
In the three and a half years since launch nearly 2,000 ideas have been submitted from close to 3,000 employees.
“We’ve made 15 investments to date, developed seven new products that are live and being used today,” she added. “We’re small, we’re growing but we’re really excited about where this is going.”
Malik explained that the the firm does not have a chief innovation officer because innovation is the job of all employees so GS Accelerate follows three principles. The first is independence.
“Once an idea is funded and the core of the team is in place, that hat team has complete independence,” he added. “ They can choose the technology tools and set milestones.”
The second principle is sponsorship so every idea that is funded has a board of directors who provide guidance, advice, a network, introductions to clients and potential business partners.
“Thirdly, we provide them patient capital which is critical,” he added. “We are not looking for immediate opportunities in the next one or two quarters but waiting for something truly special to be built for our clients over the the next two years or more.”
Businesses can only stay in GS Accelerate for two years, after which they could become part of Goldman Sachs, spin off or find new partners.
Baker said: “We are really focused on building in areas where we have a clear competitive advantage, and in other areas, we’re looking to invest and potentially acquire.
J.P. Morgan has to pay an $850,000 civil monetary penalty and BNP Paribas $6m.
M&A activity had the slowest opening six months in two years.
Blockchain-enabled platform reduces risk and operational costs and enhances liquidity for market participants.
Automated, digital-first payments platform will help financial firms with spot FX and international payments.
Consortium is creating the first open market electronic trading platform for syndicated loans and CLOs.