Goldman Sachs Restructures Its Divisions, Elevating Tech Offerings as Profit Falls
After a year of explosive growth, Goldman Sachs has shrunk its Global Investment Bank division and a tech-focused operation that had been a source of revenue growth.
The bank is reorganizing its bank divisions and elevating tech offerings as it turns from investment banks to investment engines. The changes highlight a more aggressive focus on high-growth, technology-focused offerings as it tries to adapt to a changing business environment.
The bank has closed a dozen global investment banks, and now has four such units: Global Technology Services (GTD), Global Equities (GE), Global M&A Partners (GMP), and Global FX (GFX). The changes are designed to make the banks more focused on technology investments and less on the traditional investment banking business.
With GTD, the bank has scaled back its investment-focused division, and increased its focus on tech offerings. GTD is closing the New York office because it has been profitable, according to a person with knowledge of the matter. This person said that the New York investment bank had been profitable for three years, and that a drop in investment-focused revenue was to be expected as it had been profitable for four years.
The moves also reflect Goldman’s increasingly aggressive push into tech. While it has historically focused on global macro-financial issues and investment banking, the company has begun to explore opportunities in technology, a key trend under new CEO David Solomon. The changes represent an attempt to increase the bank’s focus on tech, without diluting its investment-focused core business.
“The reason for the changes is because there is growing recognition that we need to have innovation,” Solomon said in an interview. “As you look at some of the challenges we face, there are a lot of opportunities for innovation.” Solomon is also pushing for more tech acquisitions, having committed $2 billion to tech investments last year, including the $500 million acquisition of payments firm Stripe, as well as the $500 million purchase of startup payment platform BitPay.
It makes sense, then, that Goldman Sachs wants to invest in tech rather than to return to traditional banking, which the company once was.
“Investment banking was once the big, fat goose that was laying golden eggs,” Solomon said. “Technology was laying the golden egg.”
The changes come just
