Goldman Sachs CEO warns `evolutionary’ change in tech transformation will take longer than many think

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• Goldman Sachs’ investments into technology projects may take longer to pan out than investors appreciate, the bank’s CEO David Solomon said on Monday at the Milken Conference. 
• Solomon spoke on a panel with other CEOs who discussed the disruptive effects of technology that are battering industries from banking to consumer packaged goods to global infrastructure.

Goldman Sachs is plowing money into technology projects to propel the firm’s next phase of growth. 

Whether it’s Marcus, the firm’s online lender for consumers, or Marquee, its institutional securities trading platform, the bank is spending lots of time and money. The hope among analysts and investors and many employees, frankly, is that those investments will help the firm overcome a years-long slump in trading that’s continued to persist.  

Not so fast. That was the message to come from CEO David Solomon, who spoke in Beverly Hills on Monday at the Milken Institute conference. 

“We are adding some platforms that are more technology driven, especially as we broaden out to serve consumers more broadly,” Solomon said. “But it’s an evolutionary change and these changes generally take longer than people think.”

Read more: Goldman Sachs is moving away from a tool championed by its former CFO as it pushes its traders to see clients where they once saw quick wins

Solomon spoke on a panel with other CEOs, who discussed the disruptive effects of technology that are battering industries from banking to consumer packaged goods to global infrastructure. His note of caution may offer some push back against analysts and investors pushing for more information about default rates, net interest income and other metrics to judge how the business is growing. 

Goldman made the first Marcus loan in October 2016 and also purchased General Electric’s online banking unit. The bank has since made $5 billion of such loans, and it now has more than $45 billion in customer deposits. It’s now working on building out wealth management capabilities. 

The firm has spent a lot of money on the effort. Stephen Scherr, Goldman’s CFO, said on a recent earnings conference call said the bank had spent $1.1 billion on developing consumer-facing products firmwide. That refers to Marcus, but also other initiatives. Solomon addressed those costs, obliquely, in his Monday remarks. 

“You have to invest,” the CEO said. “One of the big challenges, and one of the reasons why in our business scale matters so much, is the amount of capital you have to spend to have the best technology and be in the best position to serve clients is increasing at a reasonable pace.”

Read more: Goldman Sachs plans to offer a new digital wealth product for Main Street — and it’s part of a goal to take on wealth management giants

He added:”You have to pick the opportunities that you can focus on. We’re all limited in what we can invest in.”

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