The investment bank Goldman Sachs has just launched a service of analysis and data management in the field of financial services in partnership with AWS. The aim is to help companies obtain more relevant information through data processing.
Goldman Sachs has launched a financial data management and analytics service in conjunction with AWS to help customers process data for value. The announcement is part of a larger trend where key players in verticals – in this case, financial services – are partnering with hyperscalers to offer cloud services.
Goldman Sachs’ Financial Cloud for Data service targets hedge funds, asset managers and other institutional clients who have to deal with increasing amounts of market data in the digital age. These companies will use Goldman Sachs’ artificial intelligence (AI) tools and applications to process the data and gain deeper insights. AWS will provide computing power from its cloud services to host Goldman Sachs (GS) applications.
A questioning of the cloud
The financial services industry is generally reluctant to share data outside the corporate firewall, as any exposure can harm a company’s reputation and lead to significant regulatory and legal repercussions. However, in recent years, more and more industries – including healthcare, manufacturing and financial services – have become more comfortable with processing data outside of firewalls. business to derive commercial value. “Before, the question was “why use the cloud”? Today it’s more like ‘why wouldn’t we use the cloud’,” said Jason Malo, chief analyst at Gartner. “We see banks offering services [bancaires] as a service and they act as a facilitator on which they can create a platform on which others can collaborate”.
Amazon has partnered with companies from a variety of industries, such as Volkswagen and other automakers, to provide cloud services and consolidate software platforms in branch offices and remote offices. In 2020, Microsoft for Healthcare launched cloud services for healthcare providers to improve insight into clinical and operational data. Partnerships between cloud providers and financial services are increasingly common, as a cloud provider’s economies of scale significantly reduce costs and speed up deployment compared to launching private cloud services. In 2019, for example, IBM partnered with Bank of America to create IBM Cloud for Financial Services.
A need for infrastructure
In addition, newer banks are relying on the infrastructure of established financial institutions to launch services that they otherwise could not afford due to investment costs in staff and infrastructure, says Jason Malo. For example, mobile banking app maker Chime uses middle and back office services provided by Bancorp Bank or Stride Bank, NA Chime is essentially a technology company using banking software from other institutions. “We’ve seen big companies – tech giants – try to offer financial services in the past: AWS, Facebook, Walmart and Google. All of them tried to do things around financial services,” Jason Malo said. “We’re not saying they can’t, but in these cases regulators looked at them and said, ‘How are we going to regulate them? “”. Adding that in this case, “there is nothing incongruous to see AWS and Goldman Sachs working together”.
The growing reliance on IoT and adoption of the technology (for digital transformation) has led to a data explosion across organizations; this entails the need to leverage huge datasets that arrive from a plethora of sources. Organizations have a choice: build their own private cloud infrastructure to consolidate pools of data to run data analytics, or outsource this function to giants like Amazon.
Outsource data analytics
With digital transformation initiatives, data is generated in different parts of the business. Streaming all data to a central repository is expensive, both in terms of bandwidth and data center resources, according to ABI Research analyst Leo Gergs. “That’s why the cloud [public] is growing in importance and more and more companies are moving in this direction,” said Leo Gergs. “This is also the raison d’être of hyperscalers. They offer attractive business models to companies because they can offer a lower cost of entry. These are consumption-based models that reduce the level of capital expenditure for businesses, so they only pay for the computing resources they use.”
Developed during a two-year collaboration between Goldman Sachs and AWS, the GS Financial Cloud for Data service will empower customers to discover, organize and analyze data in the cloud. This information can then be used to gain insights and make more informed investment decisions. “This collaboration between GS and AWS will allow us to learn from our proprietary data in a private and secure environment, while leveraging the scale and speed of innovation of the cloud,” said Vlad Torgovnik, CIO of investment firm Millennium Management, in a statement.
A significant advance in data analysis
Advances in data and technology are rapidly transforming the financial services industry, with digital transformation initiatives changing business processes and customer experiences. This shift is forcing developers at investment firms to spend significant time and energy customizing various tools to manage, interpret and analyze large-scale financial data, according to Goldman Sachs. The 152-year-old investment bank believes that Amazon’s cloud-based analytics engine could also make advanced quantitative analysis more accessible in global markets. “Institutional clients will benefit from decades of Goldman Sachs experience in meeting the challenges of data management and analytics,” the firm said in its announcement.
Financial Cloud for Data extends the bank’s front-office analytical tools, such as PlotTool Pro, a time-series analysis tool, and GS Quant, the company’s Python toolkit. The service components are also compatible with FinSpace, an AWS service aimed at combining and analyzing data from multiple sources, such as location data from data warehouses or data lakes. Working with Goldman Sachs also gives AWS a specialization it couldn’t have achieved organically, as financial services demand a high level of compliance and security. “There’s a trend towards cloud specialization and part of that trend is an aspect of the maturity we’re seeing in these new services,” said Jason Malo of Gartner. “There is a great synergy there,” he concludes.