Goldman Sachs enlists American Express to take on cash management titans like Citigroup

The Goldman Sachs logo appears on the smartphone screen.

Omar Marquez | SOPA photos | Light Rocket | Getty Images

CNBC has learned that Goldman Sachs is collaborating with American Express to upgrade its digital cash management offering.

The investment bank relies on the world’s largest issuer of commercial charge cards as it seeks to dislodge competitors that handle trillions of dollars in deposits and payments to companies. By integrating AmEx’s virtual card technology into its platform, Goldman completed the cumbersome process of sorting and paying invoices for vendors and suppliers, according to executives at the two companies.

“This is a comprehensive solution to the highly fragmented business-to-business payments landscape for large corporations,” Harry Murthy, global head of transaction banking at Goldman, said in a phone interview. “It allows CFOs and Treasurers to better plan financially because you now have a seamless way to keep track of the flow of money, regardless of the payment methods used.”

Harry Murthy, Global Head of Transaction Banking at Goldman Sachs.

Source: Goldman Sachs

Cash management — the business of holding corporate deposits and helping them make payments — is the business counterpart to Goldman’s well-known efforts to break into retail banking.

Introduced in early 2020 as part of CEO David Solomon’s plans to add more stable revenue streams, the transaction banking business is already beginning to gain traction. Solomon told analysts last week that Goldman hit $50 billion in deposits by the third quarter of this year, several years ahead of the target.

Built with cloud technology to deliver a great user experience, Goldman uses algorithms to help determine the best payment method to use — card, wire or automated clearinghouse — to save businesses time and maximize card rewards. It also provides greater insight into the status of payments and cash levels.

This is an upgrade from the patchwork of legacy systems competitors have been using for decades, forcing users to switch between multiple programs to manage thousands of daily payments, according to Dean Henry, executive vice president of global commerce services at AmEx. Citigroup, JPMorgan Chase and other global banks are the dominant players in cash management.

“These big Fortune 250 companies are dealing with big banks that tend to have outdated and fragmented solutions that don’t provide the capabilities that Goldman Sachs and American Express can provide,” Henry said.

Some corporate customers are already using the platform, which will be more widely available early next year. The two companies are scheduled to announce their collaboration later Wednesday.

Repel fintech companies

The project took about nine months to complete, according to people familiar with the matter. The people said that the top executives of the two financial giants — which are headquartered across the street in midtown Manhattan — were looking for ways to collaborate.

Both players get something out of it.

The move could help accelerate the growth of its startup business because AmEx business card users everywhere will now have a reason to switch to the Goldman platform. AmEx says it has relationships with more than half of the Fortune Global 500 companies.

For AmEx, companies that have signed up for Goldman will have fewer reasons to one day switch to the new generation of fintech providers of business software and charge cards.

Startups including Brex and Ramp gained rapid ratings that caught the eye this year by peeling back customers from established players like AmEx. The handicaps started with corporate charge cards but rapidly expanded offerings in an effort to provide comprehensive business management solutions.

Fintech players have mostly targeted startups rather than the big companies that Goldman and AmEx are looking for. But at some point, they could start making gains there, too.

“There are fintech companies trying this style of solution, but American Express and Goldman Sachs have the brand and the trust and the balance sheet to help these really big companies, and that’s what fintechs don’t have,” Henry said.

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