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Goldman Seeks to Speedup Launch of Cash Management Business

Zacks Equity Research

Amid the coronavirus-led mayhem, Goldman Sachs GS is mulling to introduce its cash-management operations in the U.K. by September and across Europe by the end of 2020. The news was reported by Financial Times.

Cash management involves the need to hold deposits for corporates, receiving cash on their behalf and making payments, i.e. managing cashflows.

Earlier, the bank was expected to enter the U.S. markets, with a target to achieve $1 billion in revenues and $50 billion in deposit balances, within 5 years of making its transaction banking platform available to customers.

Per the article, Goldman is trying to lure clients by paying more for deposits in comparison to its competitors.

The move is part of CEO David Solomon’s major overhaul to diversify the company into a more reliable and stable source of revenues such as consumer banking, wealth management for high-net-worth clients and cash management.

In the first quarter of 2020, Goldman witnessed significant inflows in commercial deposit accounts linked with its new transaction-banking platform. Further, the company remains in track with its rollout and is currently serving more than 80 clients.

Though Goldman currently lags other industry leaders like JPMorgan JPM, Citigroup C and Bank of America BAC, it remains well-poised to gain market share in the space with its customer-friendly new technology platform.

Our Take

Goldman has been undertaking strategic initiatives to counter falling revenues by entering new markets and diversifying income sources. Along with the expansion in core banking, the company entered a deal with a custodian, Folio Financial, to fortify the wealth management business.

Shares of Goldman have lost 19.3% in the past six months compared with the 21.7% decline of the industry.

 

 

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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