Goldman Sachs, founded in 1869, is a multinational investment banking firm engaged in global investment banking, securities, investment management, and other financial services primarily with institutional clients. The bank lays on the line and shows its interest in the blockchain technology. It has joined R3 consortium launched by financial innovation company R3 CEV.
The mission of the blockchain project started by R3 is explained by Kevin Hanley, Director of Design at Royal Bank of Scotland, one of the consortium members: “The collaborative model we’ve established with R3 and the other banks is a very effective way to deliver robust shared ledger solutions to the financial services sector. Right now you’re seeing significant money and time being spent on exploration of these technologies in a fractured way that lacks the strategic, coordinated vision so critical to timely success.”
Besides, Goldman Sachs has already developed its own cryptocurrency for trading stocks, bonds and other assets. The application for a new virtual currency called SETLCoin was published in December 2015 although it had been filed in May 2014. Goldman Sachs says in the patent application that SETLCoin guarantees “nearly instantaneous execution and settlement” for trades. The currency aims at facilitation and acceleration of securities trade.
Don Duet, co-head of the Technology Division at Goldman Sachs, underlined the importance of current technological awareness in the financial industry in the latest edition of a company podcast series: “You could ask the question, ‘Why couldn’t this have been designed before?’ And that’s a very valid question. What I find personally very exciting about this is just the awareness that is happening within the financial community that there is a technological answer that can drive change and improve our system.”
“Because of the structure and the technological capabilities as it was being designed and created over the last several decades, you have this situation where you have multiple versions of the truth, which means that everyone needs to reconcile,” he said.
Speaking on the blockchain, Duet stated that blockchain “offers a technological solution that enables multiple counterparts to see and enact upon the same understanding of truth on an asset transfer in a way again that is immutable, that’s protected, that uses cryptology to make sure you cannot go back and change something inappropriately… creates a new way to envision the way that we do many parts of the financial industry, particularly again in places where we have multiple parties wanting to have single version of truth.”
Goldman Sachs is succeeding in its effort to adopt the blockchain technology. The Autonomous Research once conducted a survey, which showed that Goldman Sachs would considerably benefit from the coming wave of financial technology disruption. To be more exact, Goldman Sachs and JPMorgan are those very banks that get the most considerable revenue from investment banking and trading worldwide.
One of the Europe’s leading independent research providers on banking and insurance companies polled 150 executives and investors and about 85% of them predicted selected disruption or a mix of winners and losers. Only 14% thought banks face a significant threat. Visa Inc. and MasterCard Inc. follow because mobile payments become more habitual while the blockchain reduces costs in many institutional businesses.