"Those dichotomies are going away:" Wall Street divisions are blurring as tech takes over

As technology continues to move front and center on Wall Street, the lines that divide different businesses in financial services will blur, according to one of the most senior technologists at Goldman Sachs.

In a recent podcast with The Block, Goldman Sachs' co-head of global securities, R. Martin Chavez, noted that the traditionally clear dichotomies between buy-side and sell-side, banking infrastructure providers and banks, data providers and data users would deteriorate. At the same time, the amount of software on the Street will increase. 

“All of those dichotomies are going away and so it’s going to be much much harder to know, is this a client? Is this a competitor? Is this a counterparty? And we all really need to start thinking more about the ways in which we’re overlapping with other participants in the financial ecosystem as opposed to, is it a competitor? Are you with us or against us?” said Chavez. 

Chavez, who previously held positions as Goldman Sachs CIO and CFO, said firms will instead differentiate themselves by the APIs they offer, meaning institutions that are willing to open their APIs and build powerful interfaces based on them will lead the pack in the financial services industry, while the rest will be consumers of APIs.

The remarks echoed comments Chavez made at DTCC's Fintech 2019 Conference, where he underscored the importance of banks being prepared for a future with open APIs. 

In early 2017, Goldman Sachs made a foray into open APIs with its trading platform Marquee, aiming to turn the bank into "the Google on Wall Street." Although met with limited initial success, the platform later extended to contain a library of fully documented APIs and open-source codes. The platform allows clients to access Goldman's trading data, execute trades, and design their own application on top of Goldman's technology. 

Marquee is also a manifestation of Chavez's long-held vision that API-based digital platforms will be the future of financial services. 

Anybody who’s not doing that is going to be missing the biggest and most important technological change," Chavez told The Block's Frank Chaparro. "That’s the big picture."