Goldman Sachs Seeks to Replicate Apple Card with BaaS Offering

The move is part of Goldman's overall shift to software and consumer facing products.

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Need to Know

  • Goldman has publicly released APIs that allow developers to integrate the bank’s services into their own products, with the Goldman-operated Apple Card acting as a prime example.
  • Clients will able to easily open Goldman accounts and access the bank’s automated payments system.
  • The strategy, called banking-as-a-service (BaaS), is part of Goldman Sachs’ push into corporate and consumer banking.
  • Goldman first unveiled its BaaS plans at an investor day earlier this year.

Analysis

Goldman has made a bid to enter the hugely lucrative world of corporate cash-management, announcing that it will release banking services software to clients that allow businesses to integrate Goldman’s services into their own products.

Goldman will publicly release its APIs to developers, who can then build Goldman’s automated payments system into their own products. The move will allow Goldman to begin managing cash for corporations, an industry worth $32 billion a year.

Haari Moorthy, Goldman’s head of transaction banking, explained Goldman’s approach to banking-as-a-service to CNBC: “We are trying to create a new industry by integrating our services into their businesses so they can cater to their clients as if we had them,” he said in an interview with the news outlet. “Imagine a technology company that can use these APIs to create a solution for payments or deposits in concert with whatever else they currently provide to that client.”

Goldman is hoping that the move will allow it to bypass its rivals in the cash-management industry, by offering a fresh approach to corporate banking and payments. The investment bank is already late to the cash-management race: Citi and JPMorgan are already active in the arena. In addition, in entering the banking-as-a-service market, Goldman positions itself as a competitor to companies such as Green Dot and BBVA—fintechs and digital banks that, unlike Goldman, lack a banking license.

The strategy could also help Goldman accelerate its move into corporate and consumer transaction banking. Goldman is currently making moves into the consumer space with Marcus, its personal-banking app, having launched personal finance tools and a chequing account option within the app in the last year. “There’s this butterfly effect that will kick in after we roll this out,” Moorthy said. “It allows us to acquire clients of our clients, allows us to seamlessly be integrated in the fabric of banking and corporates.”

Goldman’s other significant foray into consumer banking, The Apple Card (which Goldman issues), is also part of the bank’s overall banking-as-a-service strategy. According to Harit Talwar, Goldman’s global head of consumer banking, banking-as-a-service has always been part of the bank’s go-to-market strategy with Marcus: the bank has long prioritized embedding its “product capabilities into some of the largest ecosystems and the strongest ecosystems in the water,” Talwar said in an interview earlier this year, noting that the Apple Card is one such example. Today’s API announcement, of course, now joins the list.

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