BNY writes 40% of software code with AI
AI creating value in three key areas at $467B bank
AI is taking center stage at BNY as it enters the next phase of its transformation.
The $467 billion bank’s engineering team now writes 40% of software code with AI, Chief Financial Officer Dermot McDonogh said during today’s first-quarter earnings call.
Still, AI accounts for a “modest” portion of the bank’s $4 billion engineering budget, McDonogh said, without providing an exact percentage.
The bank views AI as “one of the most important long-term opportunities for our company and for society more broadly,” Chief Executive Robin Vince said during the call.
BNY has invested in AI initiatives across the organization over the past few years and is seeing value creation in three key areas, Vince said:
- Operational improvements that boost productivity, increase capacity and streamline workflows end-to-end;
- Enhanced products and services; and
- Expanded market reach by delivering new solutions through its platforms, data and internal expertise.
“It is early days across all three dimensions, but we are starting to see AI create a tangible and measurable impact across the entire client life cycle,” Vince said, citing examples provided during the bank’s Q1 earnings, which included the deployment of 140 AI agents and a fourfold increase in AI tools in production.
As these solutions evolve, “we believe AI can become an increasingly important source of differentiation and long-term value creation for our clients, our people and our shareholders,” he said.
AI’s ability to “free up capacity” through automating tasks is especially valuable because it enables the bank to focus more on positive operating leverage, which refers to the pace of revenue growth compared with expense growth, Vince said.
“We see the world with a ton of white space, so having more capacity is super valuable for us because it actually allows us to put more people and more investment against that white space without having to grow expenses significantly to do it,” he said.
BY THE NUMBERS: New York-based BNY reported in Q2:
- Revenue increased 13.3% year over year to a record $5.7 billion;
- Software and equipment expenses rose 8% YoY to $569 billion;
- Headcount totaled 46,500, down 6.8% YoY; and
- Net income with provision for income taxes jumped 24.9% YoY to $1.8 billion.
McDonogh downplayed AI’s direct influence on the bank’s headcount, saying the reduction reflects fundamental changes to its overall business model.
“Headcount is more the output as opposed to the input,” he said. “We continue to invest heavily in talent. Our early-careers class is three times bigger today than it was three years ago.”
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