Goldman Sachs is restructuring its businesses and expanding its technology offering

News Summary:

  • The move is the latest step toward a mission that David Solomon, the bank’s chief executive, has bluntly talked about: reshaping Goldman’s culture and practices into something leaner and better aligned with a future in which technology is likely to weaken big banks’ ability to make money as intermediaries.

  • Goldman Sachs is taking another step away from its past as a clubby Wall Street partnership, adopting a new three-part structure that combines investment banking and trading into one unit, wealth management into another and digital offerings into a third, the bank announced Tuesday.

“Today, we are entering the next phase of our growth and implementing a realignment of our businesses that will allow us to further leverage the prevailing One Goldman Sachs operating model to better serve our clients,” Solomon said in a press release accompanying the bank’s latest earnings report, referring to an internal initiative that began in 2020 to create a “client-centric organizational structure.”

In addition to a combined trading and investment banking unit more similar to units at rivals such as JPMorgan Chase and Morgan Stanley, Goldman will form another division that combines its wealth management and asset management businesses. The bank’s consumer banking business, which debuted a few years ago under the name Marcus, will be folded into this unit, and the bank will focus on marketing these consumer services to employees of large companies that are already Goldman clients.

In a conference call to discuss the company’s results with Wall Street analysts, Solomon said the restructuring would help Goldman achieve three goals: increasing management fees, increasing the share of Wall Street business it acquires from competitors, and expanding its digital platform offerings to serve the largest clients with the most complex needs.

Other elements of Goldman’s consumer offerings, including the credit card partnerships with Apple and GM that ran under the Marcus name, will now be managed in another business unit called Platform Solutions. That unit will also house the cloud-based services the bank offers large businesses, including ways to manage cash and send payments quickly around the world.

Tuesday’s changes are also intended to correct Marcus’ shaky stock price. Although the bank has been a reliable trading house for decades, Goldman has not kept pace with competitors in attracting new money from high-net-worth individuals, and Marcus has not attracted the customer base its founders expected when it opened in 2016.