Goldman Sachs Renews Digital Tech Push

Tom Burroughes Group Editor London 10 August 2020

Goldman Sachs Renews Digital Tech Push

The US firm has appointed an experienced figure to renew the drive towards digital technologies changing how financial and business transactions take place, moves that it predicts will upend how banks and other institutions transfer information.

Goldman Sachs is making a fresh drive into the digital worlds of Bitcoin and the distributed ledger technology of blockchain, harnessing how they can upend banking and financial services, a report said.

The US investment banking and wealth management house recently appointed Matthew McDermott, a managing director who ran the investment bank’s internal funding operations, as its new global head of digital assets last month (source: CNBC, 6 August). 

McDermott, based in London, is taking over from Justin Schmidt, who had run Goldman’s digital assets team since 2018.

The new boss of this business reportedly believes in a future where all of the world’s financial assets will reside on electronic ledgers, and activities that today require squadrons of bankers and lawyers - such as initial public offerings and debt issuances - could be largely automated.

“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain,” McDermott was quoted as saying. “So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitisation, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”

At Goldman Sachs, McDermott is expanding his team, doubling its headcount with hires in Asia and Europe. He has also lured talent from JP Morgan. The latter firm’s head of digital assets strategy, Oli Harris has joined the bank, the report said, citing unnamed sources.

Blockchain is a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralised, publicly accessible network. This database is most commonly associated with Bitcoin, the digital currency, but is also associated with uses such as the storage and transfer of information ranging from legal to medical records, for example.

For some time, banks have examined the “distributed ledger technology” as being able to replace existing back-office systems, the “plumbing” of the financial world. 

Some banks and commentators remain to be convinced that blockhchain is going to revolutionise finance. In April 2018, for example, UK bank Barclays said it is “a solution still seeking a problem”.

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