Goldman Sachs and other major banks are edging closer to business models and hiring profiles previously found only in Silicon Valley. As the hunt for better, more insightful and more specific data rises in the financial sector, banks like Goldman are finding new ways of packaging existing assets to meet the expectations of data-hungry clients.
The power of alternative data is no longer the industry’s best kept secret, and the hunt for alpha is on. While building their data science and analytical firepower, banks are looking for new ways to capitalize on the plethora of data at their disposal, which investors continue to seek out.
Goldman Sachs developing subscription-based model for data access
The team at Goldman Sachs may be taking a leaf out of the books of some subscription-based SaaS platforms as they look for new ways to package and sell their data.
The new development was uncovered thanks to a job listing posted on LinkedIn, asking for an entry-level salesperson for their securities division. The job would entail selling Goldman’s data, analytics and risk models as part of a subscription service.
An excerpt from the post lists among responsibilities: “Design and execute the distribution of GS’ analytics, alerts, proprietary data, and risk/pricing models for service/subscription model globally, including design and implementation of sales pipeline tracking framework” and will work with the Head of Data-as-a-service. This indicates a new offering in the works.
According to Business Insider, this is in line with a new trend in which bankers are beginning to sell themselves as “content creators of a sort, writing research, designing models, devising trade ideas, and coming up with novel ways to fill orders” in order to diversify their business offering and remain relevant as the battle for innovative trading models and quant-driven decision-making flares up.
Over the past 5 years, the firm has been building on new use cases for its proprietary trading engine, known as SecDB, as, according to the Wall Street Journal, “a postcrisis ban on proprietary trading has made it more valuable as a service offered to clients than an in-house moneymaker.”
The result is a trading and risk-management platform, Marquee, which was initially launched in an effort to position Goldman as the bank of the 21st century. According to James Blackham, who worked on the Marquee platform in its infancy as the head of digital structuring, “Marquee is essentially a platform that allows different businesses at Goldman to open themselves up to clients in a secure and consistent way. Before, if, say, the interest rates business wanted to share analysis with clients electronically, it would have to build something bespoke. It would be hugely time-consuming and expensive.”
Today the platform “connects financial professionals with powerful analytics, insights, and data from the Goldman Sachs Securities Division”. The team continues to grow, hiring not financial experts but developers with “knowledge of open source technologies like React, Elasticsearch, MongoDB, and D3 and a passion for ‘solving large scale engineering problems.’”
Edging closer to the Valley
This isn’t the only move the bank is taking as it continues to emulate behaviors traditionally found in Silicon Valley. This month, the firm announced it would be releasing its previously-guarded code base used to price securities, and analyze and manage risk, on open source developer platform GitHub.
The idea is to open their technology to a community of developers in the hopes of crowdsourcing new use cases for it and potentially earning the loyalty of “computer-driven “quant” traders who have taken the investing world by storm.”
We want to be to quantitative finance what Amazon is to computing power.
The code released on GitHub will enable developers to interact directly with Marquee’s data feeds, pricing engines and other tools. Others like J.P. Morgan and Bank of America are also taking steps to open their trading platforms to developers. “Historically, banks made products that portfolio managers and traders wanted to use,” Mr. Phillips said. “Now we’re making products that developers want to use.”