In an internal memo obtained by Yahoo Finance, co-chief information officer Marco Argenti outlined a future in which Goldman is weighing the potential to build an external cloud platform for other financial services players, to ultimately build a new revenue stream.
"In the same way Amazon Web Services (AWS) was conceived, both as an internal product to streamline Amazon.com's operations and as an external product to offer the same benefits to any company facing similar issues, our core technology services can be externalized to other financial institutions,” wrote Argenti — himself an AWS alum — to Goldman’s engineering team.
Cloud computing at AWS has grown into a profit juggernaut, which in the fourth quarter earned nearly $10 billion in revenue and helped propel Amazon’s market capitalization into Silicon Valley’s exclusive $1 trillion club. Microsoft (MSFT) is also emerging as a key player in the space, with the two tech behemoths slugging it out for dominance in the cloud.
As cloud computing becomes more mainstream, Argenti articulated that "a new kind of cloud" could emerge in the form of specialized "vertical” solutions specific to the needs of financial firms.
"As increasing customer requirements, regulations, and scale put more pressure on companies to increase their technology investment in order to remain competitive, we believe that there is an opportunity to externalize some of our services in the form of a financial cloud and turn engineering investments from costs into revenue streams," Argenti wrote.
For Goldman, a cloud play fits with its overarching vision to tap into its capabilities in risk management, trade execution services, and digital consumer banking to create the first global "financial cloud" for institutional, corporate, and consumer clients.
Goldman has already made strides into the consumer space, via digital banking and its role in bringing Apple’s credit card to market. “We will continue to add more 'building blocks' to the financial cloud in the near future," Argenti said.
A crucial part of Argenti's strategy will focus on the developer community as a customer base — and their "jobs to be done," a reference to a framework developed by the late Clayton Christensen that means when a customer buys a product, they're "hiring" that product or service to get a job done.
If it's done well, that customer will "hire" the product again, but if it's not executed well, the customer will "fire" that product and find another to solve the problem.
“Developer adoption is a key driver of the adoption of our financial cloud, the same way developers determined the success of public clouds. Developers influence purchasing decisions, and the ease of use of developer products determines the velocity at which applications are developed and can drive consumption," he wrote.