Goldman Sachs joins American Express to take on cash management giants like Citigroup

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The Goldman Sachs logo is displayed on the screen of the smartphone.

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CNBC learned that Goldman Sachs is partnering with American Express to upgrade its digital cash management services.

Investment banks rely on the world’s largest business charge card issuers to replace rivals that process trillions of dollars in deposits and payments to businesses. According to executives from both companies, Goldman has integrated Amx’s virtual card technology into the platform to automate the tedious process of sorting and paying invoices to vendors and suppliers.

“It is a one-stop solution for large enterprises to the highly fragmented business-to-business payments environment,” Hari Mausi, global head of transaction banking at Goldman, said in a telephone interview. “This allows CFOs and treasurers to develop better financial plans because they can seamlessly track the flow of funds regardless of the payment rail used.”

Hari Mausi, global head of transaction banking at Goldman Sachs.

Source: Goldman Sachs

Cash management (a business that holds company deposits and assists with payments) is a commercial equivalent of Goldman’s famous attempts to enter retail banking.

The transaction banking business, which was introduced by CEO David Solomon in early 2020 as part of a plan to add more stable revenue streams, has already started to gain momentum. Solomon told analysts last week that Goldman had reached $50 billion in deposits by the third quarter of this year, a few years above the target.

Built using cloud technology and designed to provide a sophisticated experience for users, Goldman’s platform uses algorithms to determine which payment form is best to use: card, wired, or automatic. payment institution. And save corporate time and maximize card rewards. You can also get a better idea of ​​your payment status and cash level.

According to Dean Henry, executive vice president of Global Commercial Services at AmEx, this is an upgrade from the system patchwork used by competitors decades ago, in which users switch back and forth between multiple programs. You need to manage a thousand daily payments. Citigroup, JPMorgan Chase and other global banks are major players in cash management.

“These big Fortune 250 companies are working with big banks that have legacy, fragmented solutions that don’t offer the features that Goldman Sachs and American Express can offer,” Henry said. Growth.

Customers from some companies are already using the platform and will be more widely available early next year. The two companies were due to announce their collaboration late Wednesday.

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According to people with knowledge of the problem, the project took around nine months to complete. People said executives from the two financial giants headquartered in downtown Manhattan were looking for ways to collaborate.

Both companies are getting something out of it.

The move could help Goldman accelerate early business growth, as ubiquitous Amx Business Card users have reasons to switch to the Goldman platform. AmEx says it is associated with more than half of the Fortune Global 500 companies.

With AmEx, companies that sign up for Goldman’s software will have one day less reason to switch to a new generation of fintech providers for business software and charge cards.

Start-ups like Brax and Ramp are increasingly gaining great reputations this year, turning customers away from established players like MX. Disruptors started with corporate charge cards but quickly expanded their products to provide all-in-one business management solutions.

Fintech companies are primarily targeting start-ups, not the big guys that Goldman and Amex are looking for. But at some point, they could start making profits there as well.

“While fintechs are trying this style of solution, American Express and Goldman Sachs have brands, trusts and balance sheets that really support these big companies. That’s what fintechs have. It’s not like that,” said Henry. it is said.

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Goldman Sachs joins American Express to take on cash management giants like Citigroup

SourceLink Goldman Sachs Joins American Express To Undertake Cash Management Giants Like Citigroup

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