Goldman Sachs Group Inc (GS.N) said on June 30 that it is establishing a partnership with capital markets technology firm Derivative Path that facilitates thousands of U.S. credit unions and regional banks becoming clients of its foreign exchange services.
The partnership is the most recent step by Goldman towards obtaining market share in the competitive and crowded transaction banking sector, which it joined in 2019.
Under its terms, clients of Derivative Path will be free to use Goldman for all foreign exchange transactions and rate pricing. While Goldman’s current clients are mostly governments and big corporations, Derivative Path targets some 4,700 regional and community banks in the US, Goldman said.
Financial details of the deal were not posted, and representatives of Goldman refused to comment on how much it could make from the partnership.
Transaction banking refers to managing cash for multinational corporations and governments, from collecting from customers to processing employee payroll to acquiring foreign exchange rates for payments sent to other countries.
The $300 billion sector is one that rival banks like Bank of America (BAC.N) and Citigroup Inc (C.N) also intend to grow, as the COVID-19 pandemic escalated customers’ use of electronic payments.
As with its online bank Marcus, Goldman developed the technology for its transaction banking business in-house.
Buy Crypto NowGlobal Head of Transaction Banking Products and Sales Eduardo Vergara said:
“Think of (Goldman’s tools) as a FedEx tracker for payments. You know where in the world the payment is, how much, and how fast it gets there.”
Goldman established an identical partnership last year with Fiserv Inc (FISV.O), which granted the Wall Street bank access to promote its transaction banking and FX services to that company’s 12,000 banking, government and brokerage clients.
