We’re deeply investing into platforms, AI, and a well-defined data strategy: Goldman Sachs’ CIO

Goldman Sachs, an American multinational investment bank, known for its strong emphasis on technological advancements within the financial sector, is heavily investing in cutting-edge technologies to strengthen its internal processes and stay ahead of market competition. During his recent visit to India in April, Marco Argenti, Chief Information Officer of Goldman Sachs, discusses how the company leverages artificial intelligence, machine learning applications, and data-driven technologies to drive growth and improve efficiency in its operations. He also informs, why India is central to its growth and innovation strategies with over a third of its global engineers based out in the country. Edited Excerpts:

What kind of technology investments are you making at Goldman Sachs in recent years?

Being at the forefront of technology is crucial for any company, including banks, to maintain a competitive advantage. We have heavily invested in technology, especially with the rise of AI emphasizing the importance of being a leader in this field. Our board and CEO are fully committed to excellence in technology, which involves attracting and retaining top talent, fostering a high-performance engineering culture, and aligning engineers with business objectives. To facilitate a cultural shift, we have introduced the concept of working backwards from the customer, where engineers consider the customer's perspective before starting a project. We have also invested in developing interconnected platforms that serve as pathways for our operations, similar to an interstate highway system. This approach provides consistent and standardized technology accessible to all, rather than each building a complete stack. For example, we have streamlined identity and security management, optimised interfaces through APIs, and focused on building our data infrastructure. Our focus on data infrastructure has been crucial for our strategic approach, especially recently. By standardising data descriptions, enabling non-technical staff to create queries visually, and consolidating data from various sources, we have established a strong foundation for our business activities. This emphasis on data is vital for the success of our AI projects, as high-quality data is essential. A well-defined data strategy is necessary to fully leverage the potential of AI. In the past 12-18 months, we have significantly increased our investments in AI, recognizing its importance as a catalyst for innovation in our organisation and the financial services industry.

CIOs can face many challenges when migrating to the cloud. How are you addressing that gap?

For a CIO, the most difficult task for cloud migration is the fact that data has a lot of gravity. It is essential to create a bridge where essentially your data is available regardless of whether you're running in the cloud or on-premise, or through a single platform. We have integrated our diverse data warehouses into a centralised data lake, using a lake house model that separates storage from computing. This allows us to work with multiple vendors and use various tools on top of the data lake, compatible with both on-premise and cloud environments. By creating a bridge that ensures data availability regardless of the operating environment, we eliminate the need to change data consumption practices, making cloud migration easier.

In AI, can you provide an example of an innovative technology or strategy you used to enhance your customer experience or revenue?

The primary goal of AI is increasing efficiency, starting with developer efficiency, which is the first low-hanging fruit objective. We are in the early stages, but we’ve rolled out a generative AI-based copilot to essentially automate the code creation, testing, and throughout the lifecycle of developers and our code. We have already deployed this to thousands of developers and we've seen an efficiency gain that in many cases is around 20%, which is a sizeable amount of potential savings. Besides, we have been using AI for several years now to do things such as AML, KYC, or to do pricing and forecasting and sentiment analysis, etc. Today some of the efficiency-focused generative AI use cases at Goldman Sachs, beyond developer efficiency, include content production and summarisation. Several use cases are being explored across our banking and asset management businesses that are enabled by AI and generative AI. It is important to note that for all these use cases to succeed, access to data and the way they are structured is critical.

How much of your innovation work has been done in India? What are your growth and expansion strategies in India?

Approximately one-third of our 12,000 engineers at Goldman Sachs are based in India. Our Bengaluru and Hyderabad offices serve as a center of excellence for AI. Gunjan Samtani, our global chief operating officer for engineering and country head of Goldman Sachs Services India, is located here. Various functions, such as product data and the SecDb platforms, are managed from India. Much of the work involving the deployment of models and applications across our business lines is also conducted here. India is a center of excellence for AI and data efforts at Goldman Sachs, with strong capabilities in both areas. About 8,500 individuals are employed across our India offices, with almost half of them being engineers. Our hiring efforts are aligned with business needs, and we plan to hire more engineers in India this year.

When benchmarking against your competitors, which technology areas require more attention?

We have a structural advantage over some of our peers as we are less exposed to legacy technology. When I talk to my peers, we're doing well in terms of the ratio of new technology to legacy technology. We are also comparing favorably in terms of the transition to the cloud. Some of the work and products we have developed, such as our transaction banking business, were born in the cloud and created with a developer-centric approach. While we are in a strong position, cloud migration is an area where some fintech institutions have made faster progress, and I am eager to continue accelerating in that area. Overall, I believe that the talent we attract puts us in a strong position as well. Our Marquee platform and tools like Visual Structuring and MarketView offer the best experience from an institutional portal perspective. There are very few comparisons that can match the combination of scale technology and advanced customer experience that we provide. I think we are in a strong position in key areas such as cloud computing, AI, client experience, and developer-centricity.

What are the top three qualities of a CIO that are needed to succeed in the digital age?

I believe the first quality is understanding that technology is now a crucial part of a firm's strategic agenda. Therefore, a CIO should not view themselves solely as the head of IT, but as a key driver of competitive advantage for the company and especially in the era of AI, competitive advantage will largely stem from technology. Thus, the first quality is the ability to sit at the strategic table, comprehend the business, and contribute to setting the company's strategic direction. The role of the CIO has evolved significantly, becoming a strategic position for transformation rather than just IT support. A second essential quality is finding the right balance between technology disruption and overall risk management. Understanding how to proceed with velocity or long-term speed, entails setting the appropriate horizon for strategic change and pacing oneself to avoid leaning too much on the risk side. It's crucial not to fall behind in technology transformation while not taking on excessive risk. This balance has been crucial in cloud and AI advancements. Our approach to AI has always prioritised responsible AI, safety, compliance, and intellectual property protection. The third quality I believe, is understanding developers and the developer experience. Developers are increasingly vital strategically, and attracting top talent requires creating an environment where the developer experience is paramount. A happy developer is a more productive one, leading to velocity and high-quality products.