GS Financial Cloud for Data with Amazon (NASDAQ: AMZN) Web Services — that’s the name of the service — catchy, right? In fairness, the decision makes a lot of sense for Goldman Sachs (NYSE: GS). The investing banking landscape is changing rapidly and although it has capitalized on IPO mania, younger Fintech challengers are catching up to the legacy banking players.
What does Goldman Sachs do?
Goldman Sachs needs very little introduction; the financial services giant left a sour taste in the mouths of many due to its involvement in the 2008 financial crisis. Goldman has changed its tune, however.
Once a service provider for only the wealthiest and most affluent individuals in the world, Goldman has updated its business model in recent years to cater to a wider audience. It also has a fintech layer called ‘Marcus’ which manages high-interest savings and loan accounts which have been extremely successful.
And now, its latest decision, the move into cloud-based services for the greater financial industry.
Goldman Sachs and Amazon Web Services
Amazon didn’t set out to create Amazon Web Services; it was creating computing services for its own e-commerce business. But, it eventually realized the value that those same services could have for its own customers. Today, it has become Amazon’s fastest-growing and most profitable segment So, with that in mind, Goldman Sachs is attempting to do the same thing for financial services with its decades of data and expertise.
Many legacy companies in finance are still using outdated software for their operations and Goldman is aiming to solve these issues with simple app integrations. It also believes that this move will “lower the barriers to entry” for smaller trading and asset management firms as well as improve “speed and efficiency” for its customers.
Is Goldman Sachs A Good Investment Right Now?
It certainly makes Goldman a more intriguing investment opportunity. The business is clearly taking steps in the right direction when it comes to the inevitable digitization of the financial landscape, and it has the capital to put behind its current and future investments.
Its growth is noticeable in recent years despite being a legacy player, which in part can be attributed to its updated business model, but also the popularization of stock market investing in general. In addition to growth prospects, it also offers a healthy 2.1% dividend and given inflationary concerns rising, it could be a decent hedge, given financial firms usually hold up better than most in that environment.
Whether or not Goldman continues to innovate will be central to its success in the long term though, as more and more FinTechs flood the market. At a $125 billion market capitalization, it’s hard to see hyper-growth from a 150-year old business but maybe you can teach an old dog new tricks.
Are you looking for that right company to kickstart your portfolio? Look no further than MyWallSt, where our shortlist of market-beating stocks will take you to the next level. Don’t believe us? Why not get free access today?
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.