The statistic is one of several nuggets from a Credit Suisse report on how the bank uses technology, following a conversation with chief information officer Marty Chavez.
In 2000, Goldman Sachs had 600 traders in New York City making markets in US stocks. Today, that number is down to fewer than 10.
There are ways for Goldman to be more efficient with its tech spending. About 30% of the annual expense goes to maintenance, which covers things like communications, market-data expenses, and software licensing. The bank wants to get that down to 10%, which is more comparable with software companies.
These strategic investments could include things like investing in blockchain technology that underpins the use of bitcoin, with the Credit Suisse analysts noting that Goldman Sachs is "very interested in the use of Blockchain/distributed ledger technology."
Embrace Disruption—management of Goldman is very much of the belief—and we can't argue with this—that there will be far more value ascribed to those who embrace new, albeit disruptive, technologies. This disruption can be people "destructive" at times, but it can be far more destructive to be left behind in a business poised for profound change. Importantly, these changes may be disruptive, but also both relationship and profit margin enhancing, through delivery of a better product to Goldman's clients.
This has big implications for the bank's staff. In some ways, technology can make their lives easier. Last month, the bank announced an initiative designed to make the lives of junior investment bankers easier — by letting technology do more of the grunt work for them.
That would free up $600 million to $800 million, which could either go back to the bottom line, or be reinvested strategically, Credit Suisse estimates.
Other investments include Symphony, the instant-communications platform out to displace Bloomberg's terminal, and Goldman's Marquee app, which delivers data and analytics to staff and is being rolled out to clients.
The note said (emphasis added):
But technology might also soon replace more workers.
The analysts estimate that Goldman spends $2.5 billion to $3.2 billion on technology each year, or about 7% to 9% of revenue.
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