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In an effort to expand its transaction banking business, The Goldman Sachs Group, Inc. GS is partnering with Derivative Path, which is a leading provider of capital markets technology and derivatives execution services to regional and community banks.
With the collaboration, thousands of U.S. regional banks and credit unions will be able to use Goldman Sachs’ foreign exchange services.
While the financial terms of the agreement have not been disclosed yet, the partnership will allow clients of Derivative Path to provide a more cohesive end-to-end global payment solution to their underlying customers using Goldman Sachs’ transaction banking platform.
Art Brieske, the global head of payments for Goldman Sachs Transaction Banking, said, “Regional and community banks now have access to the same global payments capabilities as large money center banks. We are pleased to collaborate with Derivative Path to provide access to our global payments capabilities through their platform and provide regional and community banks with a comprehensive yet simplified and efficient cross-border payment solution.”
Pradeep Bhatia, the CEO & co-founder of Derivative Path, stated, “Teaming up with one of the world's largest and most-established financial institutions is a major step in the right direction of bringing greater technology sophistication and flexibility to the regional and community banking sector in the US. The launch of our joint solution with Goldman Sachs substantiates our mission of delivering a new wave of innovation to these firms.”
Transaction banking means handling cash for governments and multinational corporations, from processing employee payroll to collecting from customers to securing foreign exchange rates for payments sent to other countries.
The collaboration with Derivative Path is the latest step by Goldman Sachs to gain market share in the crowded and competitive $300-billion transaction banking sector, which it had entered in 2019.
Business diversification has been the key source of Goldman Sachs’ earnings stability. Within traditional banking, a diversified product portfolio has better chances of sustaining growth than many other banks, which have exited some of these areas.
Goldman Sachs has been undertaking initiatives to boost asset management and wealth management businesses, while expanding its digital consumer banking platform. Rolling out digital checking facilities will enhance its consumer banking platform, while the GreenSky acquisition will facilitate the expansion of its point-of-sale capability.
By rolling out services in different regions, GS is boosting its digital consumer lending platform — Marcus by Goldman Sachs.
Over the past six months, shares of GS have lost 24.8% compared with the industry’s decline of 23.6%.
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Currently, Goldman Sachs carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks from the finance space are S&T Bancorp, Inc. STBA and Credit Acceptance Corporation CACC. Currently, STBA sports a Zacks Rank #1 (Strong Buy), while CACC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for S&T Bancorp’s current-year earnings has been revised 5.4% upward over the past 60 days. Over the past year, STBA’s share price has declined 11.1%.
Credit Acceptance’s current-year earnings estimates have been revised 11.8% upward over the past 60 days. CACC’s shares have gained 4.4% over the past year.
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The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
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