The economist thinks the Fed ought to pay more attention to financial markets when setting interest rates.The Fedread more
U.S. President Donald Trump's latest tariff increase — and Beijing's plans to counter them — are hitting U.S. companies in China, according to a joint survey this month by...China Economyread more
"We are also constantly watching whether the trade war will turn into a tech war," Ma said Tuesday, according to a CNBC translation of his Chinese remarks published by a locak...China Economyread more
Kohl's, J.C. Penney and Nordstrom release disappointing earnings news, putting a damper on their sector.Retailread more
Bezos's comments give a rare glimpse into his interest in the auto industry. Amazon recently invested in two self-driving start-ups.Technologyread more
While investing often seems like a contrarian game where going against the flow feels like the better bet, the reality is that investors who bought the most-favored stocks...Hedge Fundsread more
Talks between the world's two largest economies have stalled after each nation lobbied higher tariffs on the other's imports.Traderead more
"Pretty much the entire suite of apps that 'talk' over the internet could be vulnerable," said Tom Uren, a senior analyst at the Australian Strategic Policy Institute's...Cybersecurityread more
A Chinese official in Hong Kong is urging the quick passage of legal measures to allow fugitives to be transferred to the mainland.China Politicsread more
GAC Motor said its delaying its launch in the U.S. but had no timeline when it could launch there.Autosread more
Markets in Asia traded cautiously on Wednesday morning as trade tensions continued to linger between the U.S. and China.Asia Marketsread more
Goldman Sachs is considering paying big multinational corporations more for their deposits than other banks as it paves the way for its entry into a mundane but prized business: managing cash.
The global investment banking powerhouse and fifth-largest U.S. bank, which is six months into building the required technology, aims to start the service in the first half of 2020, according to two people familiar with the plan. They agreed to discuss internal strategy on the condition they not be named.
The bank, which will earn fees and gain a captive client base for its foreign exchange business, could offer existing corporate clients more on deposits if they sign up for Goldman's cash management services, a person familiar with the plan told Reuters.
Long considered a low-margin, utility-like service, the wholesale payments and cash management business generated about $250 billion in global revenue in 2017 for big banks, according to management consulting firm Oliver Wyman.
The steady stream of income has grown more attractive to banks that have been shifting away from volatile areas such as trading and investment banking in the aftermath of the financial crisis a decade ago.
Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N), Bank of New York Mellon Corp (BK.N), HSBC Holdings PLC (HSBA.L), Standard Chartered PLC (STAN.L) and Deutsche Bank AG (DBKGn.DE) currently dominate the market, handling corporations' payments and receivables across different regions.
As Goldman seeks to grow stable revenue by adding a cash management service for clients whom it already offers hedging and strategic advice, the investment bank further evolves to match rival universal banks' range of businesses.
Goldman Sachs is about half way to a goal management set in 2017 to generate $5 billion more in annual revenue by next year, largely by boosting reliable, fee-based businesses.
However, rivals privately scoff at the idea Goldman can gain significant market share in a business where contracts often last five years, clients tend to stick with their banks and a global network of banking licenses greases the wheels.
"The regulatory and operational costs of building a global cash management platform will be very steep and will take many years to achieve the scale that will justify the costs," said a senior commercial banker at a large European bank.
"Large multinational companies are consolidating the number of banks they deal with, and they don't tend to switch service providers frequently for workday functions like facilitating supplier payments and managing payrolls."
Nonetheless, Goldman believes it can make inroads.
Its investment bankers have heard corporate treasurers at big U.S. multinational corporations complain that other banks' systems are clunky and outdated, one person familiar with Goldman's plans said. Goldman will try to woo those accounts with a user-friendly interface and other improvements, and eventually hopes to be the third or fourth bank corporate clients use, in addition to other banks, for cash management.
Later this year, Goldman will become its own first client by moving its deposits from other banks onto its own cash management platform. Goldman stands to earn money from cash management in three ways: fees earned for processing funds, fees earned on exchanging a client's cash into other currencies during a transaction, and by using deposits as operational account balances, a cheaper alternative to wholesale funding.
Oliver Wyman predicts that wholesale payments and cash management revenue will grow 5 percent annually over the next five years. Growing volumes and rising interest rates will more than offset narrowing profit margins caused by increased competition, the consulting firm said.
Paying clients more for deposits and offering new technology is a strategy Goldman used when it launched Marcus, its online retail bank, in 2016.
It has paid off. Marcus had $30 billion of deposits in the United States and the United Kingdom and $4 billion in loans as of November, and is contributing about $200 million to Goldman's revenue, according to a November presentation.
In recent months, Goldman has advertised that it is hiring cash management compliance, technology, and legal professionals.
In one LinkedIn post seeking applications for lead data architect in the commercial banking engineering team, Goldman said it was looking for "innovative solutions to traditional banking activities" by combining the "heritage of a 148-year-old financial institution with the agility and entrepreneurial spirit of a tech start-up."