If you thought investment banker Marty Chavez was joking in January 2019 when he said that the future of finance is all about APIs (that’s application programming interfaces, for anyone new to development), you haven’t been paying attention. “The way we see it, [the future] going is to APIs,” Chavez declared. “I cannot say it enough; it is going in the direction of who produces APIs and who consumes APIs.”
Chavez left Goldman in September 2019, but the firm’s emphasis on APIs remains. Needless to say, it wants to be an API producer, not a consumer.
The firm’s emphasis was reiterated Dec. 4 when CEO David Solomon told attendees at Amazon’s Re:Invent Conference in Las Vegas that Goldman’s new Marquee products, which make its SecDB database directly accessible to clients, will be available as APIs via the cloud.
Again, if you’ve been paying attention, this was not entirely new news. Goldman started building an API store under Chavez in 2017, who said at the time that the firm was “redesigning the whole company around APIs.” Last year, it hired 60 new development staff for Marquee, specifically to work on the shift.
It’s not just Marquee, though. Goldman’s developer site explains that it actually has three main APIs: GSQuant, PlotTool Pro, and Marquee API Developer. While Marquee is all about allowing clients to directly access Goldman’s pricing and analytics platform for anything from backtesting trade ideas to index creation and portfolio rebalancing, GS quant provides a toolkit for quantitative finance underpinned by Goldman’s risk platform; meanwhile, PlotTool Pro provides access to Goldman’s historic derivatives trading data and models of derivatives markets.
By making these tools available as APIs for clients to tap into and to build their own products around, Goldman is effectively pivoting its business model. As it explains itself, APIs are akin to electricity points, allowing their users to operate other products that make use of their standardized interface.
Goldman didn’t respond to a request to comment for this article, but as its own developer site makes clear, it wants its APIs to become the standardized interface in finance. “We believe the future of finance will be created by developers,” the site proclaims. “Institutional finance is on the threshold of a transformation that could radically change what it means to be an investment bank.”
Of course, other banks are on the API bandwagon too, but most admit that Goldman has been riding it for longer and is further down the road than the rest. “It’s like they want to become Blackrock’s Aladdin,” says one competitor, referring to the platform that currently provides risk analysis and trading tools to much of the asset management industry.
JPMorgan has its own API aspirations. Goldman’s rival is currently working on APIs for its Athena risk and pricing system, and has launched ‘Morgan Markets,’ which offers APIs that clients can use to execute trades and get quotes. However, JPMorgan’s APIs aren’t on the public cloud. This could be a mistake. In a decade, Goldman might be known as the market utility provider, while JPMorgan will be just a bank.
A modified version of this article originally appeared in eFinancialCareers.