Goldman Sachs is exploring plans to create a Netflix for data, and it marks a new frontier for Wall Street
- Investors may soon be paying monthly subscription fees to Wall Street banks in much the same way they subscribe to Netflix or Spotify.
- A recent Goldman Sachs job ad for an entry-level salesperson gives one of the clearest visions yet for what the business model might look like.
- According to the LinkedIn posting, the job would include selling internal data, analytics, and risk models as part of a subscription model.
- The move comes even as rivals have raised privacy concerns about handling customer data.
At some point in the not-too-distant future, investors may find themselves ponying up monthly subscription fees to Wall Street banks in much the same way they subscribe to Netflix or Spotify.
At least, that's the hope of bankers searching the depths of their institutions for data sources that investors may buy.
And now a job ad from Goldman Sachs provides probably the clearest picture yet for what the business model might look like.
According to the recent LinkedIn posting, the company is looking to hire an entry-level salesperson whose job would include selling internal data, analytics, and risk models as part of a subscription model.
In a bullet point under the responsibilities section of the job ad, Goldman Sachs says the person would:
- "Design and execute the distribution of GS' analytics, alerts, proprietary data, and risk/pricing models in a direct-$-for service/subscription model globally, including design and implementation of sales pipeline tracking framework."
The role will have a mandate to hire more people and "expand distribution globally as the model is proven through revenue growth and client subscriptions, and as the product suite and addressable market expands," the job ad says.
The person will work with the head of "data as a service" — the shorthand term to describe the industry's efforts — to design new products, develop a sales pipeline, and work with clients.
Much like Netflix offers movies and TV shows and Spotify offers music and podcasts, Wall Street bankers have started describing themselves as content creators of a sort, writing research, designing models, devising trade ideas, and coming up with novel ways to fill orders.
Those could theoretically be sold through subscriptions, and Goldman would offer the feeds from its Marquee trading platform, which serves up risk analytics, trading tools, and research, as well as data.
"We are focused on making Marquee a world-class digital storefront for all things related to financial markets and risk management for our clients," a Goldman spokesman said in a statement. "Monetization strategy is a secondary concern. This will evolve over time."
Subscriptions offer the promise of a new revenue model for Wall Street trading operations hobbled by new rules, dampened volatility, and a challenged customer base.
It means taking a page from Silicon Valley, where tech behemoths make piles of money from their troves of data. In the financial markets, third-party vendors hawking so-called alternative data — geolocation data, web-scraped corporate details, and text-parsing using CIA interrogation techniques — have become increasingly popular with investors. Those are often sold through monthly or annual subscription fees.
Until now, the largest banks have waded in carefully, moving cautiously in their handling of sensitive data and the uncertainty about what types of information might provide real signals for investing. After years of discussions about revenue possibilities and privacy concerns, the posting is the surest sign yet that firms are plowing ahead with their plans.
Some firms are keen to offer third-party data, while others are scouring their own computers for data that can be cleaned and put into a form that clients can use. In some cases, business models call for a value-added service to make existing relationships more loyal, or in the case of subscriptions, to bring in additional revenue from new clients.
And yet the promise has recently run into concerns from clients wary of having their data shared. One bank exec said his firm would likely wait longer than he once expected to introduce a product, while another said his bank's effort was so early that it hadn't held extensive talks with clients. Both asked for anonymity to discuss what they consider to be the early stages of any plans.
Daniel Pinto, JPMorgan's co-president, spoke to the difficulty earlier this year, saying that discussions with clients had shown that many feel uneasy about having their own data shared with others. The topic is fraught in the wake of consumer-data breaches at tech giants like Facebook.
"You need to be very careful to protect client privacy," Pinto said in January from the sidelines of the World Economic Forum in Davos, Switzerland. "A lot of clients don't want their data used elsewhere, even in aggregate."
According to Goldman's job description, the bank is looking for a salesperson with more than five years of experience, including at least three years of "selling risk analytics, data, or charting services for direct payment (as opposed to an included component of other services)." As of Thursday afternoon, 69 people had applied for the role, according to LinkedIn.
The new hire would be part of a sales team being developed around Marquee. As recently as last fall, when Business Insider saw a demo, the technology platform's dashboard included a tab or menu option to make it easier for clients to find alternative-data sources. In November, the bank chose Anne Marie Darling to run a dedicated sales group to help sell the platform, foster adoption, and create new revenue sources.
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Friday, March 29, 2019
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