Dive Brief:
- Goldman Sachs’ tech spending rose even as quarterly revenues declined during the three-month period ending Sept. 30, according to the banking and financial services company’s Tuesday earnings report.
- The company spent $459 million on communication and technology in Q3 2022, up more than 3% from the previous quarter and 16% year over year. Total revenue fell by 12% and earnings were down 43% year over year, the report said.
- David Solomon, Goldman Sachs’ CEO, highlighted a three-pronged business restructure that reflects an elevated role for technology in the more than 150-year-old firm, during the earnings call.
Dive Insight:
Platform Solutions will consolidate the technology side of Goldman Sachs’ business in one primarily cloud-based platform, according to Solomon.
Goldman Sachs’ asset and wealth management businesses and its banking and global markets businesses will be similarly consolidated, Solomon said.
The restructuring comes at a time when revenues and profits are down and economic indicators are pointing south.
“Everywhere I go, macro themes dominate,” Solomon said. “In my conversations with CEOs, they tell me that they are rethinking business opportunities and would like to see more certainty before committing to longer term plans.”
While other areas may see cutbacks, investment in innovation remains strong, and tech budgets may be recession-proof, according to Gartner.
Worldwide spending on technology is projected to increase 5.1% and reach $4.6 trillion in 2023, according to the analyst firm.
Most companies are continuing to up investments in modernization even as inflation, rising interest rates and macroeconomic uncertainty squeeze budgets. and Goldman Sachs is no exception.
Elevating Platform Solutions to a place on par with its other lines of business – wealth management and investment banking – is part of a larger modernization push.
The company is bringing software engineers and developers out from behind the scenes to support customer-facing innovations, CIO Marco Argenti said during an online Wall Street Journal CIO Network event on Wednesday, the Wall Street Journal reported.
Goldman Sachs made Argenti the company’s sole CIO earlier this year in a C-suite realignment that moved George Lee, formerly co-CIO, to a newly created Office of Applied Innovation. Jared Cohen, a former Google exec who was CEO of the tech incubator Jigsaw, was brought in to co-pilot the innovation office with Lee.
While Solomon was blunt about current economic realities and their impact on revenue, he was optimistic about progress on the technology front.
“We have 11,000 engineers here, and we're doing some very, very interesting things as the world is changing and the world is evolving with technology,” he said.
