Our clients and the industry demand it and I have the pleasure of working directly for two leaders at BNY Mellon who focus on innovation, resiliency, reliability and efficiency all day, every day. This is what enables our business to move forward, delivering growth and providing exceptional client service.
For me, at its essence, banking facilitates getting capital from where it exists to where it generates a return or does the most good. And a great bank should do this in a way that removes friction, cost and waste, so that that real benefits and real returns, enable growth.
How you do that, whether you’re leveraging AI, machine learning or distributed ledger, you are revolutionizing the 'how' and in some instances the 'what' a bank does to enable outcomes. When I think of innovation, it's not about trendy projects that come at the expense of capital preservation and creation, it's about doing real things that affect real people and enable real beneficial outcomes in the here and now. It also excites your workforce to keep pushing the boundaries and exploring the art of the possible, and ensures you have a culture that continually thinks of how you can be there to support the future challenges, and accelerate the opportunities your clients will face.
Jochen Müller: That is a good point and the view we take when we speak to clients. Innovation shouldn’t be seen as a competing priority but the means by which clients can achieve their business outcomes. As a result we’ve centered our open platform strategy around the creation of a strong industry network, to drive additional value in the investment chain and support the buy side to achieve desired business outcomes.
Given this shared perspective, I’m interested to know whether you think firms have different expectations on innovation from a FinTech, compared to a large enterprise like BNY Mellon?
Hans Brown: You are absolutely right, an open-architecture approach is best. If we look at the difference between a FinTech vs. a larger enterprise, the FinTech will almost always concentrate on solving specific pain points or investment challenges, most often as a standalone solution. On the other hand, as a larger enterprise with our reach and scale, we have to think about how we can help our clients across the entire investment lifecycle. That’s why we launched BNY Mellon OMNISM; a data-centric platform that opens solutions for clients across the investment lifecycle. With a platform like this, we essentially bring together, not only our suite of solutions and robust data management capabilities, but also the option to integrate with the third-party systems and providers our clients chose to work with.
What I like about this approach is that it provides clients with a comprehensive set of capabilities, enabled by one provider. Everything is delivered in an open format enabling easier integration. As a result, we aim to collaborate with anyone who shares our vision to make better client experiences. For example, by joining forces with SimCorp, we’re delivering optimized data integration and transparency through open architecture. And the optimal way of doing this is to embrace open ecosystems, where we provide the environment to co-create and incubate new products and services, in conjunction with our clients, as well as BigTech and FinTech contributors.
Our fundamental view is that an open ecosystem encourages everyone to work together. We’ve shifted the company culture so we can be more agile and innovative. An open ecosystem also celebrates the diversity of experience. There is no one organization that knows everything fully. When everybody brings a different skill, a different capability to the table, innovation flourishes.
Jochen Müller: Diversity of experience is a significant benefit. I agree that combining expertise and know-how with one or several entities can enrich the innovation delivered. And while the industry had been closed for many years, I’m pleased that the notion of working together for the good of the end-client is becoming widely accepted. It is the reason we see so many industry collaborations today, including the one between SimCorp and BNY Mellon, and the many partnerships we have fostered elsewhere.
We have heard about the ways in which BNY Mellon is delivering innovation. I’m keen to know of an industry example you feel has added real value to the investment process?
Hans Brown: Investing in cloud technology is a key priority for BNY Mellon, and it has been at the centre of many of our developments within the last year. For me, it has been interesting to watch the gradual shift from an almost cloud-negative industry, where hardware was seen as a necessity, and the debate was shrouded in security and trust concerns, to one that is now openly adopting not private but actually public cloud. As with everything, the industry just needed time to understand the fundamentals of a new way of operating. Like with innovation, change also has a cultural and technology impact.
Microsoft played a significant role in responding to both culture and technology. They worked with industry stakeholders to debunk the concerns and perceived threats, and facilitate knowledge that helped the mindset challenge. They also invested on the security front, so that public cloud is now an accepted standard for buy-side operations. This opens the door to standardization but also coming back to innovation, it becomes the foundation for developing and delivering solutions with far more scale and speed, to support clients’ business outcomes.
We proactively formed a strategic alliance with Microsoft recently, among other key players, to help build cloud-based solutions and to take them to market with leading asset managers and owners around the world. Our goal is to combine a cloud operating model together with disruptive technologies like machine learning within an open ecosystem, to create a future-fit operating strategy. One area where we see positive client impact is in the use of machine learning, to identify patterns in large data sets. Here we can make valuable forecasts like end-of-day balances or security lending fee movements. There is also a computer vision-enabled patent pending solution in the works, to further automate signature authentication. Ultimately, the aim is to simplify processes and proactively deliver additional insights to clients.
Jochen Müller: The connection between change and innovation runs deep. It is actually one of the reasons why we’ve moved to an outcome-based delivery model to demonstrate how positive change can support business goals. In your example of the cloud, fear of the unknown, or having to start from scratch can be a threat to innovation. What role do you think human emotion plays in how we approach innovation? And how can firms abandon fear and embrace the art of the possible?
Hans Brown: You can do amazing things with the right mindset. That starts by abandoning the fear of setting goals that are multiples greater than what you’ve ever done before. Moving to an effective, transparent risk assessment and management culture, that allows you to think boldly and open you to the art of the possible. From time immemorial human beings have been assessing risks. To make the leaps they had to get really comfortable with being uncomfortable.
The longer we as an industry do things, the more comfortable we get in doing them a certain way. Being out of our comfort zone helps to become obsessed with not only what but how an innovation is going to be used and why it is needed, because developing something that's great, yet nobody will use, doesn’t help the overall innovation agenda or move the industry or our clients forward.
We were founded by an innovator in 1784 and have been at this for the last 237 years, so we stand on the shoulders of the innovators that have preceded us. Our approach has been to engage the entire employee population around the world to transform each process, client interaction and product. For those firms starting out on their innovation journey, our advice is for any digital transformation to deliver the best client experience and embed it into everything you do.
Hans Brown: But that’s our experience. SimCorp is celebrating its 50th anniversary this year and that is a remarkable achievement. Congratulations! In light of this, I’m interested to learn what SimCorp views as core to embracing innovation and change, and what impact has it had on the organization over the decades?
Jochen Müller: Thank you Hans. That is a great question and something we have been thinking about as we approach this milestone. Innovation has been integral to our success. Since the creation of SimCorp Dimension and we have continually delivered new functionality, with at least two releases per year and now quarterly.