Bank of New York Mellon to boost 2022 tech spending

The Bank of New York Mellon will increase its technology spend next year in an effort to build its platform offerings and modernize its applications. Tech spend — broken out as software and equipment — reached $372 million in the third quarter, up 9% year over year. The $470.5 billion bank reported earnings of $881 million in Q3, with revenues of $4.0 billion, an increase of 5%. [caption id="attachment_220097" align="alignright" width="300"] Bloomberg Mercury[/caption] Chief Executive Officer Todd Gibbons said the plan is to continue investing in technology as the bank builds fintech-like offerings for financial institutions. “We've been increasing our tech spend over the past few years,” Gibbons said. “A lot of that … was in infrastructure and resiliency and building a sounder infrastructure to support the growth that we're looking to drive today.” In the past, the bank has invested in infrastructure and resiliency to support growth that it’s looking to drive now, Gibbons said. He categorized future tech investments as falling into three categories: Investments in Pershing X — a new business unit for designing and building solutions for the advisory industry — and treasury platforms, which are leveraged for revenue, as well as the bank’s data and analytics platform. Infrastructure and risk management. “Our cyber defenses are not cheap, and we need to continue to invest in them,” Gibbons said. Automation for efficiency. “We’ve actually inventoried the number of things that we do manually, and we're looking to knock them out for automating when it's right — it's what might create some significant efficiencies and risk reduction,” he said. The bank will also focus on modernizing several of its core apps, Gibbons said. “We’re putting a very modern payments app engine underneath all of this,” he said. “The good news is there are a lot of opportunities, but it will come with some costs and our intent is to increase our technology spend next year.” BNY Mellon’s fintech-like offerings are growing revenue, particularly Pershing X, a tech-based play to “incubate, engineer and deliver a comprehensive, all-in-one set of advisory capabilities to Pershing’s Wealth Solutions clients,” the company said in an Oct. 14 announcement. “If you think about Pershing, we're really the largest, corresponding clearer,” Gibbons said. “So we're a third-party player for broker dealers in the retail space, and now a registered investment advisor, and that business is actually growing but it's not growing nearly as fast as the advisory space is growing. “We are the clearer [so] we are providing a lot of the back-end services for that business. We think there's the opportunity, too, for us to be an integrator in that business.” Gibbons believes that the growing usage of Pershing X will solve an integration problem for wealth advisors. “Advisors have these multiple technology tools, a bunch of different data sets that they're trying to try to integrate or trying to look at. Oftentimes, they're logging into multiple systems and they're really reducing the advisory productivity,” Gibbons said. “That would be across things like financial planning, investment modeling, even some banking activities.” There's really no solution out there today that can tie that all together, Gibbons said, adding that Pershing X will be an open architected, end-to-end solution that will “provide a digital capabilities capability and real good retail experience, both to the advisor as well as to the investor themself.” Finally, Gibbons noted that the bank’s ability to deal with phase five of uncleared margin rules “really differentiated us in the market." Global regulations for uncleared margins are being rolled out in six total phases. “It validated the multiyear investments we've been making in automation and client experience,” Gibbons said. “While many products in the industry really struggled … in time to meet the go-live deadlines at the end of September, the New York Mellon was lauded for having a more streamlined process for client onboarding experience and for having digitized and automated the payroll schedule and amendment process.” Shares of Bank New York Mellon [NYSE: BK] were trading at $57.48 as of 3:46 p.m., up .13% from morning open.

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Bank of New York Mellon to boost 2022 tech spending

Company reaps revenue from fintech-like platforms

Digital shortfalls may be biggest threat to community FIs

Goldman Sachs looks to grow Marcus platform

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