A memo from Goldman Sachs' co-CIO laid out plans for a global financial cloud for customers that could be 'transformational to the firm's business for decades to come'

• Marco Argenti, Goldman Sachs' co-chief information officer, sent a memo on Thursday seen by Business Insider detailing the opportunity he sees for the bank to create a financial cloud.
• Argenti, who spent six years at Amazon Web Services before joining Goldman in October 2019, believes building out a cloud specifically for financial companies could be "transformational to the firm's business for decades to come."
• IBM announced similar intentions in November with the launch of its own public cloud focused on Wall Street.
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One of Wall Street's most prestigious firms believes it's well-positioned to create the first first global financial cloud for its customers.

From credit cards to consumer banking, Goldman Sachs has spent the better part of the last few years expanding beyond its trading and deal-making roots. The next big endeavor for one of Wall Street's top dogs could come via the public cloud.

Marco Argenti, the bank's co-chief information officer, explained the rise of industry-specific clouds - also known as 'vertical clouds' - and how the bank could stand to benefit in a memo sent on Thursday and seen by Business Insider.

"Goldman Sachs is well positioned to be the leader in creating and offering the first global "financial cloud" to institutional, corporate and consumer clients," Argenti wrote. "That is an opportunity that can be transformational to the firm's business for decades to come."

Argenti is no stranger to the world of public clouds. Prior to joining the bank in October 2019, Argenti spent six years as a top executive at Amazon Web Services, the world's largest public cloud company.

The business of public clouds has exploded in recent years. Firms have recognized the benefits from a cost and innovation perspective of outsourcing their servers to be managed by big tech companies such as AWS, Microsoft and Google. AWS booked almost $10 billion in revenue in the fourth quarter of 2019.

However, while many industries were quick to adopt the public cloud, Wall Street firms have taken a more tempered approach. More recently, financial firms have shown a willingness to put resources towards the public cloud, but hesitancy remains.

Argenti highlighted products like Marquee, Goldman Sachs' trading and risk analytics platform, as an example of a core technology built for internal use that could also be spun out to outside customers and is a 'building block' of the financial cloud. Marquee relies heavily on making application programming interfaces, or APIs, available to developers.

"As increasing customer requirements, regulations, and scale put more pressure on companies to increase their technology investment in order to remain competitive, we believe that there is an opportunity to externalize some of our services in the form of a financial cloud and turn engineering investments from costs into revenue streams," Argenti wrote.

On Monday, the Financial Times first reported Goldman Sachs was in talks with Amazon about helping the tech giant facilitate small-business loans to its merchants. The bank already offered its banking expertise to another big tech firm via the Apple Card, which is backed by Goldman Sachs.

In a nod towards those types of agreements, Argenti's memo mentioned Goldman's tech could be "externalized to other financial institutions, requiring a bank-grade platform that's scalable, secure and fully compliant with industry regulations."

A key part of the opportunity at hand, Argenti mentioned, would be successfully courting developers. In November 2019, Goldman Sachs' newly-minted chief technology officer, Atte Lahtiranta, told Business Insider a major focus of his job would be to attract outside developers to work with the firm.

To be clear, Goldman isn't the only firm with hopes of rolling out a financially-focused cloud. In November, IBM announced a public cloud tailored specifically for financial firms. The tech giant worked with long-time public-cloud holdout Bank of America to develop the cloud.

At the time, Arvind Krishna, who will take over as CEO of IBM in April, explained how the tech giant would differentiate its approach from others in the space.

"Transparency is the best antiseptic," Krishna said. "It's not just a question of, 'Hey, trust me I'll build it.' ... That I think is a big difference, and that is unique here, and that is perhaps not being met by the others."

See also: Here's how IBM's new CEO helped turn Wall Street's public cloud security fears into an opportunity to work with long-time holdout Bank of America

See also: Read the memo Goldman's new tech chief sent to 9,000-plus engineers explaining why they should ditch PowerPoint in favor of Amazon's famous narrative memos

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