Goldman Sachs Group Inc said on Thursday it is launching a partnership with capital markets technology firm Derivative Path that opens the door to thousands of U.S. regional banks and credit unions becoming clients of its foreign exchange services.
The partnership is latest step by Goldman towards gaining market share in the crowded and competitive transaction banking sector, which it entered in 2019.
Under its terms, clients of Derivative Path will be able to use Goldman for all foreign exchange transactions and rate pricing. While Goldman’s existing clients are chiefly large corporations and governments, Derivative Path targets some 4,700 regional and community banks in the United States, Goldman said.
Financial details of the agreement were not disclosed, and Goldman representatives declined to comment on how much it could earn from the partnership.
Transaction banking refers to 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 $300 billion sector is one that rival banks like Citigroup Inc and Bank of America also aim to grow, as the COVID-19 pandemic accelerated customers’ use of electronic payments.
As with its online bank Marcus, Goldman built the technology for its transaction banking business in-house.
“Think of Goldman’s tools as a FedEx tracker for payments,” Global Head of Transaction Banking Products and Sales Eduardo Vergara said. “You know where in the world the payment is,how much, and how fast it gets there.”
Goldman launched a similar partnership in 2021 with Fiserv Inc, which gave the Wall Street bank access to pitch its transaction banking and FX services to that company’s 12,000 banking, brokerage and government clients.