Lot of our transformation is being led from India: Brian Shea

Q&A with vice chairman, CEO Investment Services, Bank of New York Mellon

Bank of New York Mellon, the 232-year old custodian bank, is keen to work with fin-techs in India. Brian Shea, vice chairman, BNY Mellon and CEO, Investment Services rather says that India is leading the banks initiative in transforming itself and helping other financial institutes in adapting to the technology change. In an interview with Shivani Shinde Nadhe, Shea and Suresh Kumar, global CIO, BNY Mellon and iNautix, talk about the technology disruption on the financial industry, its eight innovation hubs and India leading the tech disruption. Edited excerpts:

How significant is the impact of technology on banking and financial institutes?
We are living through this historic period of change. Next month marks the eighth year anniversary of the peak of the financial crisis. And we are still living it...thankfully Indian economy is growing well, leading the world in many respect, but in many parts of the world were our clients are, they are facing lower economic growth rate, we are dealing with very low or negative interest rates which is not good for banks, we are dealing with the most historic period of global regulatory reform and global regulatory change, which we have not seen in the recent time ever. There is political change going on, the most recent being Brexit, which has impact on banking and financial institutes around the world. And then there is the technological change, digitization of everything. We are seizing all that. Now, this change which can be challenge can also be huge growth opportunity.

How is BNY Mellon dealing with this disruption?
When your core growth rate is pressured by all those forces, financial institutions are compelled to transform. We are leading our own business improvement process. The whole idea is to become more productive and efficient with the resources we have, to be able to fund the entire regulatory change that is happening and invest in strategic growth area and reward shareholders. We have been able to make significant progress on our business improvement plans.

Suresh Kumar: There is lot of inefficiencies the way financial institutions operate. We want to make a platform that enables people to offer services that people can consume in a seamless way. For this we have developed Nexen, our digital platform. We have been working on this since 2013 and we have been working on various components which include-hybrid cloud, APIs, big data, and an app store. We have in-sourced a lot of our application and built it inside. We just had a hackathon a few days back and over 500 people participated from India. We spend about $2.1 billion annually on IT.

We are using artificial intelligence, bots, chat bots, cognitive intelligence, big data into this platform. We are looking at bots in two ways. We have almost 60 bots for robotic process automation, but we are investing in bots that understand natural language processing as well.

BNY Mellon has created hubs of innovation, with two in India. How does this work?
We have in total eight innovation hubs, with two-one each in Singapore and New York-coming up by end of this year. We have two in India-Pune and Chennai. One of the part of the business innovation and transformation that we are going through was creation of innovation hubs around the world. This allows collaboration between clients, businesses and well as give us access to fintech startups.

Suresh Kumar: Different people have different approach to innovation. We believe in getting the entire organisation to be an innovator. Currently we have 2,500 people in these centres, end of year we will have 3,000 and we will get more. But we also want to use these centres to train people on new technology. To me the Nexen platform and the processes that go with it is a new approach and faster way of doing things.

Historically our business was in silos. Technology and business did not talk. By carefully choosing people from different business unit to each of these centres allows us to improve or get rid of silos.

In India we have fairly large number of people in client service delivery and large number of people in technology. We are getting them to work together as single team. This way, they get to observe and get to know what the capabilities are.

The other idea of the innovation centre is to get fin-techs to come work with us just like it would be in a Silicon valley, and they get access to large FIs.

How are you tapping into the startup eco-system?
We work with lot of fin-techs. We are having dialogue with almost 200-300 fin-techs across the world. We have made about half-a-dozen investments in fin-tech directly or in consortiums that invest in fin-techs.

We have also worked with a couple of them around solutions for trading, secure messaging, institutional client data, payments and blockchain. We are helping to create standards and enable these new technologies to blossom.

Rather one of the first fin-tech that we collaborated in our new app store was an India fin-tech, they used social media screening, applied AI to the data and gave information viable to investor relation.

How significant is India is this transformation for BNY Mellon?
A lot of this transformation is actually being driven from India, almost 50 per cent of our tech team is in India. Because we have been doing this for long and co-locating with business people their business knowledge is very high and their ability to have strategic impact is growing. We are seeing a lot of initiatives being led from the East. So robotic process automation team sits out of Pune. They are using automation to automate processes of offshore delivery here and then they are taking it across other centres.

Will BNY Mellon as a bank look at having direct presence in India?
We have been in India for 25 years now. Today we are mostly asked by our Indian asset manager, corporates and clients to serve their needs outside of India. We love this country and we had a great experience of working here. If we had the right business opportunity and we can create or leverage the shared economies of scale model that will add value, we will consider. We need to be client led and where we can create distinct value. We are very much invested in this market, the more invested we are there will be more chances of us being present more locally.