Blockchain Implementation at Goldman Sachs: A Trust-Building Report

This report explores the application of blockchain technology within the financial sector, specifically focusing on Goldman Sachs, to address trust issues with customers and stakeholders. It details the background of Goldman Sachs, highlighting past scandals that have eroded customer trust, and proposes blockchain as a solution for enhancing transparency and security. The report covers the technical design of a blockchain system, including nodes and block structure, governance mechanisms such as on-chain and off-chain governance, and potential risks and challenges like ethical considerations and legal issues. Furthermore, it discusses future trends in blockchain, such as hybrid blockchains, and their potential impact on business operations. The aim is to demonstrate how blockchain can foster a more trustworthy relationship between Goldman Sachs and its customers by ensuring data accuracy, accessibility, and validity of transactions.

BLOCKCHAIN SOLUTIONS
DEVELOPMENT

EXECUTIVE SUMMARY
This report covers the brief definition of the blockchain technology, also describe the use of
blockchain technology in the business to build the trust with customers and stakeholders. It
describe the background information of the organisation and the trust issues which is facing by
their customer. This include the description about the blockchain oriented system as how it s
effective to enhance the business practices, it also describe with the help of this businesses will
be able to provide transparency in their services.

TABLE OF CONTENT
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
a) Background information of Goldman Sachs Group bank and financial sector.......................4
b)Role of trust in financial sector and current approaches for building trust..............................5
c) Role of blockchain technology for creating the trust...............................................................6
d) Technical design for the blockchain system............................................................................6
e) Governance mechanism for the blockchain solution:..............................................................9
f) Risks and challenges associated with the blockchain system:.................................................9
g) Future trends in blockchain technology which can impact the business...............................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Blockchain technology is the distributed network system which records the financial
transaction information. It is the digital ledger of the transaction that is present in the system
which records the activity which makes it difficult to change or even protect from any malicious
activity (Michael, Cohn and Butcher, 2018). Goldman Sachs is the leading investment bank and
financial service company of America. This report describes the implementation of blockchain
technology in the business operation to build trust among the customer and stakeholders. It
describes the role of trust in the industry, role of blockchain for developing trust. It further
involves the technical design for blockchain system and the future trend in blockchain
technology to impact in business solution.
MAIN BODY
a) Background information of Goldman Sachs Group bank and financial sector
Goldman Sachs Group has been selected for this report and in the context of this bank it
can be said that this multinational investment bank and financial service provide asset
management, securities and investment management. It is one of the largest investment bank in
the world in context of revenue. It owns Goldman Sachs bank USA that is a direct bank. During
financial crisis 2007-2008, it suffered a lot. In the year of 2020, it was blamed for major scandal
with 1MDB and for that it has paid fine of over $2 billion under FCPA currently (SOLOMON,
BLANKFEIN and COHN, 2019). This act has affected trust of its customers and now it is
striving hard for regaining its image and trust among customers.
Target customers: It is known that this bank and financial service provider operate at the
centre of global financial market. It provides services to Hedge funds, endowments and
foundations, governments, asset managers, brokerages and other institutional clients. Along with
this, this bank has around 3 million customers in which around $36 billion customers are in

consumer deposit and $5 billion customers are of customers loans. Overall, it can be said that
principle investment, investment banking and asset management are main business lines of this
bank.
Strategies: Goldman Sachs Group make use of effective strategy and the main aim of
using strategies is to grow its three core businesses such as: trading and principle investment,
investment banking and securities services. It makes use of effective tools that also make it able
in performing tasks or business operations in an effective manner (Doyran, 2017). Plot Tool Pro
is the most popular tool that gives unparalleled access to this bank that makes this bank enable in
understanding complex market dynamics, sharing ideas and testing trading strategies.
b)Role of trust in financial sector and current approaches for building trust
Trust is one of the main important key of success and in the context of financial sector, it can be
said that sales and image of this sector depends on trust only. In addition, it can be said that it is a
2-way strategy such as: internal resource mobilization and external resources to country.
Financial sector is built on the foundation of trust. Nowadays, with increasing technology and
access to technology, cybercrimes are increasing. Due to this reason, customers have become
conscious and they do not trust easily on business. There is no doubt that customers have now
significant power so, reliability, transparency as well as accountability has become important
paramount of finance (Zeffane and Melhem, 2017). In the context of Goldman Sachs Group
bank, it can be said that, it is suffering from trust problems as due to blame in scandal and other
issues, customers do not trust easily. So, it now needs to make use of effective approaches or
pillars for building trust include:
Security: Data breaches and hacking cases are increasing and it is affecting trust among
people. So, it is important for banks to make sure that digital technologies that they use have
security and reliability. Cybersecurity is the main key of building trust.
Personalisation: There are some technologies that are being used by banks such as:
machine learning and AI. Bank is finding easier in managing financial activities by making use
of these technologies and providing personalised services.

c) Role of blockchain technology for creating the trust
Blockchain is the record keeping process or can be named as trust building technology. It
securely records, store or manage the transaction information, it is the distributed system because
the recording of data is store in various location. This technology highly guarantees the data
accuracy it develops the transparency which enables the users to easily access or verify their
data. As for the financial sector this technology enables the faster transaction as it enables the
company to build trust, transparency with their customers (Nowiński and Kozma, 2017).
Business model for adapting blockchain technology:
blockchain business model is the decentralized system which enables the peer- to peer
transaction, in these businesses use the tokens to earn the profit. Blockchain as a service
model(BaaS) this model help the organization to give an ecosystem through which they can
easily maintain their blockchain system. It will enable the company to conduct research. As for
the Goldman Sachs company they are dealing with the problems regarding trust issues which
their customers are facing from their company's services. With the implementation of block
chain in their organizational system so that they can enable the better services this technology
enables them to build trust by giving transparency and security services to their customer. It also
allows them to develop trustful relation with the stakeholders. This business model allow the
company to ensure the validity of the transaction for an example if the customer made a change
in the transaction then all the system will check the blockchain to know that the transaction is
valid or not. Therefore, it builds the trust among the customer so that they will retain to the
company.
d) Technical design for the blockchain system
Technical design for the blockchain system required the deep understanding of this technology
for that purpose company need to hire the employee who knows how to manage or implement
this technology (Ahluwalia, Mahto and Guerrero, 2020). Building a blockchain system involves
the blocks, encrypted data which is occur between the blockchain user. Blockchain structure is
like the tree as the blocks become stronger or smoother when it becomes large.
Nodes:
These are the networking notes which ensures the reliability or validity of data then it stores the
information in the digital ledger system. Each node service is to store the copy of the ledger. As

for the Goldman Sachs company each node in the system will enable their customer to easily
access the data and it enables the transparency so that they can easily view their transaction
which builds their trust with the company.
Blocks structure:
Block are define as the series of transaction which is made by the customer in the digital ledger.
This transaction information is save as a block. Block is simply made of the header and consist
of the metadata, which involves the transaction information. Blocks can be huge in the size.
Therefore, this blocks in the system ensures the trust between the organization or their
customers, these blocks in the system enables the security so that it will be not become a cyber
attack victim (Wang and et.al 2019).
Illustration 1: Blockchain architecture

e) Governance mechanism for the blockchain solution:
Blockchain ecosystem involves the system protocol and the participation of the human and it is
depended on exist and new tech to develop the governance methods. As in the non presence of
the centralized system decentralized network system rely on the innovative governance structure
to know the longevity of the project. Governance mechanism enable to take decision in projects,
as well as provides the ongoing updates which can ensure the smoothly running of the system.
There are two governance mechanism which are as follows-
On chain governance mechanism:
It is the governance mechanism system which is used by the organization to maintain or
implement the changes made in cryptocurrency blockchain. It ensures the highly transparency in
the transaction system (Kwilinski, 2019). It will help the Goldman Sachs company to regain the
trust of their customer or the stakeholder as this mechanism enable the transparency which is
already known to the stakeholders.
Off chain governance mechanism:

This mechanism system behaves like the real politics which exist in the world. In which the
interested bunch of system tries to control the network in which they involve the processes to
make others to be on their side. In such system the power of stakeholder is more, it is also useful
to implement as in which it is not required for the customer to pay the transaction fee. It also
enables the good customer relation with the company (Pan and et.al 2020).
Goldman Sachs company also proceed to implement both off chain and on chain
mechanism in their system as for that they need to choose the trusted delegates so to mark the
changes on their behalf.
f) Risks and challenges associated with the blockchain system:
As blockchain system is able to deliver the transparency or trusted relationship with the customer
but this system has risk and challenges too which a organization need to cope up so that their
functionality will work better.
Ethical considerations in the blockchain system:
Data privacy, security is the major issues related to this blockchain enables system, storage usage
, issues regarding the smart contracts and the taxes are identified as major ethical issues in this
technology. Also the biggest ethical issue is cyber attack but for that Organization can proceed to
implement strong blockchain system which can stop all the malicious activities as data hacking,
privacy issues. The solution to solve the cyber attack problem Goldman Sachs company can use
the cryptocurrency technology which is the collection of the binary data as it create the
vulnerability to penetrate by the attacker so that it does not allow the to access the information
(Saxena, Bhushan and Ahad, 2021).
Legal challenges in the blockchain system:
Privacy issues, regulatory issues are the major concern of the lawmakers is to prevent the crime.
As the blockchain technology is widely used therefore it is considering with the increased legal
scrutiny. For that purpose company can proceed to follow all the legal laws as Anti- money
laundering(AML) and know your customer (KYC) it enables the company to give their
stakeholders or customer a relevant essential reassurance. So that they will show their strong
support to the company or remain connected with them.
g) Future trends in blockchain technology which can impact the business
By implementing blockchain technology organisations will be able to increase their annual
revenues. There are future trends in the technology which are as follows-

Hybrid blockchain:
It is an emerging topic in the blockchain ecosystem. As it is define as the kind of blockchain
which is trying to evaluate the public blockchain solution as well as for the private blockchain
solution. This type of blockchain is operated in the closed system therefore by using this
Goldman Sachs company can ensure the security of the data over the network so there customer
remain loyal to them.
Interoperability with the Blockchain network:
Interoperability in Blockchain will enable the customer to make transaction from more than one
blockchain network. As it allow the user to share the data in secure way across the various
blockchain system. So the Goldman Sachs company can proceed to implement this technology as
it enables their customer to easily access the data or to send the data over the blockchain
network. Through this it will develop the trusted relationship between the company and their
customers.
CONCLUSION
From the above report it is concluded that the implementation of the blockchain
technology enables the company to retain their customer. This blockchain business model system
involves the role of blocks and nodes which ensures the securely storing of the transaction
information. As for the company for building trust with their stakeholders this technology will
enables the customer to easily view their transaction or to easily make changes. This report
illustrates how the businesses would proceed to use this to improve their work system. It
described the technical design for the blockchain system also described the governance
mechanism. It lastly concluded with defining the risk and challenges with the blockchain system,
and the future trends in the blockchain technology.

REFERENCES
Books and Journals
Ahluwalia, S., Mahto, R.V. and Guerrero, M., 2020. Blockchain technology and startup
financing: A transaction cost economics perspective. Technological Forecasting and Social
Change. 151. p.119854.
Doyran, M.A., 2017. How Goldman Sachs Turned the Great Recession into Competitive
Advantage Using Strategic Management. Rutgers Business Review. 2(3). pp.357-376.
Kwilinski, A., 2019. Implementation of blockchain technology in accounting sphere. Academy
of Accounting and Financial Studies Journal. 23. pp.1-6.
Michael, J., Cohn, A.L.A.N. and Butcher, J.R., 2018. Blockchain technology. The Journal. 1(7).
Nowiński, W. and Kozma, M., 2017. How can blockchain technology disrupt the existing
business models?. Entrepreneurial Business and Economics Review. (3). pp.173-188.
Pan, X. and et.al 2020. Blockchain technology and enterprise operational capabilities: An
empirical test. International Journal of Information Management. 52. p.101946.
Saxena, S., Bhushan, B. and Ahad, M.A., 2021. Blockchain based solutions to secure IoT:
background, integration trends and a way forward. Journal of Network and Computer
Applications, p.103050.
SOLOMON, D., BLANKFEIN, L. and COHN, G., 2019. Goldman Sachs’ 1MDB “Four
Monkeys” Defense and CEO Solomon’s Golden Opportunity.
Wang, Y. and et.al 2019. Making sense of blockchain technology: How will it transform supply
chains?. International Journal of Production Economics, 211, pp.221-236.
Zeffane, R. and Melhem, S.J.B., 2017. Trust, job satisfaction, perceived organizational
performance and turnover intention: A public-private sector comparison in the United
Arab Emirates. Employee Relations.