How We Built our Digital Transaction Bank—in 2 Years
By Luc Teboul — Head of Engineering, Transaction Banking
Goldman Sachs Transaction Banking (TxB) has not yet reached its third anniversary, but we’ve come a long way. The journey began in June 2018, when Goldman Sachs set out to build a digital transaction bank—in just two years. To put things in perspective, the business had five employees then, as we began to define our plan.
The Strategy
Our first decision was to break the effort into two main parts. On the one hand, we would build our core platform in the cloud, developing the software systems to handle deposits, execute payments across multiple rails, apply necessary controls for sanctions and fraud, and maintain the data. On the other hand, we had to build the capabilities we needed to interact with clients—the APIs, files and web interface.
From the get-go, we had a clear vision about how these two pieces would interact—and how they would work both for our direct clients and for banking as a service (BaaS) partners. We would start with the core platform.
Our first step would be to take on the transaction banking needs of the Goldman Sachs organization as the initial client for our platform, heading toward a first milestone that we dubbed ICCM, for inter-company cash management. The second step would be to develop our product strategy, covering deposits, payments, liquidity and BaaS, and get those products into the market. That would get us to the full launch of Goldman Sachs TxB at our second anniversary.
The transaction banking needs of the Goldman Sachs affiliates were challenging, to be sure, but also presented us with the perfect use case to drive development of the core platform. Others in TxB have discussed this in more detail in other posts. Suffice to say there was significant revenue opportunity, five legal entities to serve, five currencies to manage, and a requirement for the platform to handle around 20,000 payments and $100 billion per day, including some complex payments on behalf of customers. Co-developing with an internal client has many advantages: You have direct access to the client, you can dive deep into procedures, and you have more control around how you orchestrate the migration. All of this is very valuable when maturing a technology platform.
The Execution
So, we had a clear strategic vision, but we still needed to execute. Engineering managers in my position are often asked to take over an existing team or business and help it evolve, transform or grow. But here we were building a team, a platform and a business all at the same time—something I had never in my career been asked to do.
We needed to build our engineering team fast. Hiring a lot of engineers is easy, but hiring a lot of high caliber engineers is not, and we knew we had an extremely high bar for the quality of our engineering talent. We put a comprehensive recruitment program in place across our three major hubs—New York, London and Bangalore—striving for both speed and quality in our hiring. Six months later, we were 60. A year and a half later, 250. Today there are 300 engineers on our team.
We started out by working on our ability to develop on the cloud and build a security and control program, and then we worked on our core capabilities. Less than a year after our first steps, in March 2019, we made our first real-world payment and began to onboard our Goldman Sachs affiliates as clients. To get to this—our ICCM milestone—we had kept a relentless focus on delivery and execution. Such a focus remains a vital feature of the Goldman Sachs TxB culture to this day.
In parallel with the engineering efforts, the business was building its product, sales, operations and risks teams, and we were refining our product strategy and focus ahead of our planned full launch. The Goldman Sachs TxB business is built like a startup. We talk about front-to-back, meaning all our functions are parts of one growing business—focused on the same goals.
TxB Full Launch
We prioritized deposits, and especially virtual accounts, and then payments and liquidity products. We expanded our core platform to create products that our clients could use while also focusing on building digital capabilities: our web interface, our APIs and our ability to interact with clients through files. We integrated our capabilities into our BaaS offering, aiming to reach even more clients through partnerships.
We moved all of this forward with an obsession on client experience and security—during onboarding, account opening and payments, regardless of channel. We think about client experience broadly. We wanted a quick and seamless know-your-customer procedure, and an intuitive user interface. But we also worked to design globally consistent products, meaning they work the same way whether you are in the U.S., Europe or Asia and regardless of the currency you use. Building products that feel simple and intuitive for clients can be exceptionally hard—but that type of simplicity is a cornerstone of our product philosophy.
We made our goal: We were ready with the full launch of Goldman Sachs TxB in June 2020, our two-year deadline. I often get asked: How is it possible to build a digital transaction bank in two years? Hopefully, what I have described here begins to answer that question.
Today, we have hundreds of corporate clients and tens of billions in deposits. We have announced ambitious partnerships with SAP Ariba, GTreasury, Stripe and others that make both our treasury services and our BaaS offerings more powerful. We are actively expanding our products, launching our BaaS platform and looking to expand in Europe and Asia.
With the benefit of our client and partner interactions, and with going on a year of operating experience, we can now look back on the specific decisions we made along the way—and the broader principles we embraced. All in all, they have helped us create a banking platform and a business to be proud of. We have demonstrated the value of the ideas that motivated us when we set out on this path—and that underpin the ambitious goals we have for our future.
