As Crypto Slumps, Goldman Sachs Aims for a Wall Street Built on Blockchain

Goldman, JPMorgan are already processing some trades using the technology behind cryptocurrency markets

Wall Street’s biggest banks have largely avoided investing directly in cryptocurrencies. But many are quietly working to integrate blockchain, the technology behind crypto, into trading and other businesses.

Goldman Sachs GS -2.91%▼ Group Inc. is already trading some bonds and other debt securities for clients on blockchain-based networks such as Ethereum, and the bank is building its own blockchain-based trading platform. JPMorgan Chase JPM -3.27%▼ & Co. already has a platform in place, called Onyx.

Goldman Sachs Talks to Its Critics in Effort to Make Friends

Bank raises financial targets at its first-ever investor day

Goldman Sachs Group Inc. GS -1.16% set higher financial targets Wednesday in an effort to turn a skeptical shareholder base into believers in Chief Executive David Solomon’s turnaround plan.

Speaking at the Wall Street bank’s first-ever investor day, Mr. Solomon said Goldman aims to hit a 13% return on equity over the next few years, which would put it closer to best-in-class rivals such as JPMorgan Chase & Co. That figure was 10% last year, dragged down by spending on new ventures like consumer banking and a big legal charge related to Goldman’s involvement in a Malaysian corruption scandal.

Shares were flat in morning trading. Goldman’s stock has barely risen since 2007, while JPMorgan and other rivals have hit fresh highs.

Mr. Solomon opened with a joke, encouraging the audience to hold its questions until the end but “feel free to break into spontaneous applause.” The spiel that followed, intended to convince shareholders that Goldman can regain its luster and continue to grow, boiled down to three tactics:

  1. defend existing businesses like investment banking,
  2. add new ones on Main Street and
  3. cut costs.
“If this seems simple, that’s the point,” he said.

The firm, once famously secretive, set hard targets for shareholders:

  • cut $700 million in annual costs in its struggling securities-trading division,
  • bring $250 billion in new assets into its money-management arm and
  • keep costs to under 60% of revenue. That figure was 68% in 2019, including the Malaysia legal charge.