June 18, 2019
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How We are 'Digitizing This Very Bank' at BNY Mellon

Written by: Roman Regelman | Senior Executive Vice President, Head of Digital

Since joining BNY Mellon in September 2018, our 50,000 employees have heard me say that we are 'Digitizing this Very Bank.' More than a catchy phrase, it's the name of BNY Mellon's Digital strategy that we believe will not only make us successful, but will soon be emulated by others in the industry.

At BNY Mellon, we have embraced change for 235 years, having played pivotal roles in forming, and evolving, the banking system in the U.S. and globally. We have the brand, market position, and client base to create the digital enterprise that will help lead our clients through the current times, and beyond.

Digital approaches enable us to become even more relevant to our clients - removing unnecessary complexity and processes to become more nimble and able to rethink how we help our clients deliver and maximize value. We must if we want to be in business for the next 235 years.

Models for Digital Transformation

Through my career, I've observed three models of Digital Transformation, particularly in the financial services industry, where I have spent a great of my career:

  • The Silicon Valley model
  • The Parallel Bank model
  • The Digitizing this Very Bank model

In the Silicon Valley model you are not working at the core of the business, but rather acting as a fintech to drive innovation and digitize the business. It creates great results and excitement, and generates buzz, but doesn't change the core.

In the Parallel Bank model you are creating an outpost, which is an entirely new digital bank operating in parallel, with its own separate organization, technology and operations. This unit has the luxury of not dealing with legacy systems. But it won't have the scale.

So what's different - and better - about The Digitizing this Very Bank model-the model we have chosen for BNY Mellon? It's the only model in my mind that delivers true sustainable results-one that is not building something separate, but digitizing everything the firm does.

'Digitizing this Very Bank' is about changing each process, product, and client interaction so they are digital-in line with best standards and client expectations. Not just being better than yesterday, but about being on par with the leading world-class examples-whether as big and global as Amazon, or local and cutting-edge like Go-Jek, a transportation network and logistics disruptor in Southeast Asia.

Our approach is working in a client-centric way, in a cross-functional fashion, using best practice examples from around the world and harvesting the power of our people.

Reaching Toward Our Digital Horizons

Perhaps you've also heard us mention our three Digital Horizons. If not, I'll clarify them now:

  • Horizon #1 is Core Digitization. It's about improving, automating, and digitizing our products, services and processes used in every client interaction. Examples include removing any manual interactions, getting rid of faxes and deploying self-service. And speaking of faxes, many of our clients continue to fax information to us each day. In fact, we receive thousands of faxes from clients per day. How many people fax their orders when purchasing goods and services?
  • Horizon #2 is End-to-End Client Re-imagination. This is where we re-think how we do things for our clients. We step back to address the most fundamental needs of our clients, from their perspective, and change and evolve what we do for them. Thinking about an experience through the client lens, I'll use an example many of you will be familiar with- applying for a mortgage. Do you really care about all of the back-end processes involved in processing your mortgage, or are you really only concerned with moving into your beautiful new home? No one that I know ever came home and said: 'Bad news, our mortgage process failed. But the good news is that the mortgage company had a really great app.'
  • Horizon #3 is Digital Business Development. This last horizon is about building innovative products and services. It's about becoming a truly integral part of our clients' ecosystems by using our data and theirs, available insights about the world, and capabilities of the broader ecosystem of start-ups and large companies, to drive differentiated experiences and value propositions for our clients.

Imagine this: a surfer in Bali, Indonesia, picks up on a trend. Perhaps it's a new wave (no pun intended) of surfboards or revolutionary kind of wetsuit. In turn, this one surfer has an effect on the valuation of major U.S. companies. Through a combination of the surfer's, companies', and world data (such as weather or social sentiment) we can spot trends that our clients can act on.

The sum of our Digital Horizons equals CHANGE. We're changing the way we work throughout the enterprise.

Growing through Collective Intelligence

To get us further toward each horizon we need to embrace the world's collective intelligence, since a global ecosystem is superior to the individual knowledge of any single company.

We are embracing this collective wisdom in what we call a 'culture of partnership.'

When I was a management consultant, I would often hear clients fearfully say 'the fintechs are coming!' and 'how are we going to fight these disruptive technologies?'

I didn't view it that way then, and still don't now. I don't fear the fintechs. Nor do I fear our competitors.

What I fear is our competitors working with the fintechs before we do.

A very different but equally illustrative example is our strategic alliance with BlackRock, through its BlackRock Solutions business. Here we have come together to offer asset management clients key solutions from BNY Mellon combined with functionality of BlackRock's Aladdin platform. It's a 1 + 1 = 3 case in point where all parties benefit.

Our partnerships are about combining the best from the rest of the world - large technology companies, fintechs and even our clients - and combining it with our expertise, breadth and resources.

It is about openness and inclusion.

And it is why we call it building a culture of partnership.

Teaming Up with Artificial Intelligence (AI)

BNY Mellon is not experimenting with AI. We are using it. Because AI is real and it works.

A quick story: At first, Garry Kasparov, Russian Chess Master, was unaccepting of his 1997 defeat against IBM's 'Deep Blue,' a chess playing computer. Later he came to realize the triumphant teamwork of humans and computers. Today a free computer program can beat a world champion chess master, but if you asked that same program to tell you what the difference was between a notepad and an iPad - something a child would understand - it would likely fail.

Together, in many industries, AI plus human intelligence - which I refer to as 'AI+HI' - is cutting costs in dramatic fashion, up to half in many instances, and more importantly, it's cutting processing time by up to two-thirds.

Here are a couple of ways we are using AH+HI - and some debunked myths about AI along the way.

  • Robo Advisors: The popular belief was that robo advisors would put human financial advisors out of business. Wrong. Robo advisors have actually empowered them to better serve their clients.

AI has provided human financial advisors with a wealth of data and insights into wealth creation that they in turn can pass along to their clients. It has allowed advisors to enter markets that typically are out of reach for them. It has also enabled standardization, which provides better outcomes for the customer, and reduces the exposure for the advisor by keeping portfolios aligned with stated objectives.

So robo advisors are actually a great example of how the collective intelligence of AI+HI is delivering amazing benefits for human advisors, and for clients.

  • Contract Reviews: BNY Mellon has more than 1 million contracts in place. In fact, the oldest contract that BNY Mellon continues to enforce was created in 1922 - nearly 100 years ago.

Those contracts are held with clients, with government agencies, and with vendors - lots and lots of contracts. And these contracts each have lots and lots of pages, where each page in those contracts have lots and lots of unstructured data. Imagine the amount of unstructured data contained in all of those contracts.

Did AI make any lawyers disappear? No. But deploying AI to go through the documents to pull critical information has saved enormous costs and helped lawyers understand key aspects of the contracts, the consistency across contracts, and is helping to assure compliance and provide numerous client benefits.

Digital is About Change, Not Technology

Digital is not about tinkering with technology or creating an outpost. It's about trying to apply new thinking that can fully digitize the business.

Most importantly, Digital is about the client experience. Full stop. It's not about how we're set up behind the scenes or how we're organized.

  • It's about benchmarking globally to true leaders - whether that's Apple for customer experience, Amazon for the ease of doing business, or Google in its ubiquity.
  • It's about opening up to the world and the power of collective intelligence, which is the only way in my mind, transformative growth can be achieved.
  • It's about making friends with change, because change is powerful and inevitable.

Almost 100 years ago, Marie Curie, a French scientist said, 'the way of progress is neither swift nor easy.' A century later, you may have heard others take a modern day twist by saying, 'If you dislike change, you're going to dislike irrelevance even more.'

Change is a constant, and we're using it to our advantage - in fact, at BNY Mellon, we're thriving on it.

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The Bank of New York Mellon Corporation published this content on 18 June 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 June 2019 12:08:01 UTC