As deals slow and tech grows, old-school banks are re-inventing themselves to keep up.
Driving the news: Goldman Sachs (+2.33%), one of the world’s most important financial institutions, is restructuring its business to streamline work and improve its digital offerings.
- David Solomon, the bank’s CEO (and part-time DJ), is on a mission to stay with the times by prioritizing tech investments that could otherwise render the bank obsolete—this is his third major restructuring of the firm in the last four years.
- The bank will combine its investment banking and trading units; its asset and wealth management arms; and create a third unit for digital banking platforms.
Why it matters: Goldman is an elite investment bank, but it’s starting to resemble some of its less prestigious competitors lately, offering a wide range of services (including bank accounts for lowly retail customers).
- As rising interest rates make money more expensive, the economy slows, and tech-forward challengers attract new clients, older banks are adapting to survive.
- But before you start feeling too bad for these rich and powerful firms, know that Goldman is doing fine after posting a 5% jump in profits from the previous quarter.
Zoom out: Rivals like JPMorgan and Morgan Stanley have taken steps like combining their trading and investment banking units already, while Credit Suisse is approaching a deadline for its restructuring plan (although that’s being driven by more scandalous causes).