Goldman Sachs Group Inc announced a partnership with capital markets technology firm Derivative Path that will allow thousands of US regional banks and credit unions to use its foreign exchange services.
The collaboration is Goldman’s latest attempt toward increasing market share in the congested and competitive transaction banking area, which it entered in 2019.
Derivative Path clients will be able to use Goldman for all foreign exchange transactions and rate pricing under the terms of the agreement. While Goldman’s present clients are primarily huge organisations and governments, Derivative Path is aimed at around 4,700 regional and community banks in the United States, according to Goldman.
The agreement’s financial terms were not disclosed, and Goldman executives declined to comment on how much money the cooperation could generate.
Transaction banking is the management of cash for governments and international organisations, which includes anything from processing employee payroll to collecting from customers to securing foreign exchange rates for payments sent to other nations.
As the COVID-19 pandemic enhanced clients’ adoption of electronic payments, other banks including Citigroup Inc and Bank of America strive to expand in the $300 billion market.
Goldman constructed the technology for its transaction banking business in-house, as it did with its online bank Marcus.
“Think of (Goldman’s tools) as a FedEx tracker for payments,” Global Head of Transaction Banking Products and Sales Eduardo Vergara said. “You know where in the world the payment is, how much, and how fast it gets there.”
In 2021, Goldman announced a similar relationship with Fiserv Inc, allowing the Wall Street bank to promote its transaction banking and foreign exchange services to the company’s 12,000 banking, brokerage, and government clients.
(Adapted from XM.com)