How is one of the world's oldest banks positioning itself to take on modern economic challenges? BNY's Chief Commercial Officer, Cathinka Wahlstrom, and Global Head of Enterprise Execution and Chief Corporate Affairs Officer, Jayee Koffey, sit down with American Banker's Editor-in-Chief Chana Schoenberger. Together they reflect on the bank's success over the last 240 years and describe how they are confronting today's global economic turmoil.
Transcription:
Chana Schoenberger (00:16):
Hello, I'm Chana Schoenberger. I'm the editor in chief of American Banker. Thanks for joining me in the Leaders Forum. And I have here with me today two executives from BNY. I have Jayee Coffey, who is the global head of Enterprise Execution and Chief Corporate Affairs Officer. And I have Cathinka Walstrom, who is Chief Commercial Officer, and both of them are on the executive committee. So what you have is one of the oldest banks in the country, if not in the world. Jayee, do you want to start off, just tell me what it's like, what's going on at this bank that's 240 years old now? Yeah,
Jayee Koffey (00:48):
Absolutely. Thanks for having us on hana. So we are America's oldest bank. We're very proud of it, 240 years of history, which means 240 years of building trust and resiliency for our clients, the US financial system and the global financial system, and 240 years of developing and deploying innovation at scale. So we're in 2024 and are very much looking ahead to really continue to uphold that sense of privilege, but also responsibility, managing, moving and safekeeping $50 trillion of assets while clients around the world.
Chana Schoenberger (01:22):
And you're one of the biggest custodians as well.
Jayee Koffey (01:25):
We are and very proud of that. But not only in terms of custody services, we also provide payments, clearing claral management, a whole host of wealth advisory as well as wealth management, investment management products for clients. Largest banks, largest insurance companies, largest asset managers, asset owners who all in turn help to serve and build economies and communities around the world.
Chana Schoenberger (01:50):
So here at American Banker, we are looking at banks all over the country and they range from the biggest like you to the very, very smallest. What sort of things do you see going on in the banking industry right now and what's your strategy?
Jayee Koffey (02:07):
Sales, our strategy is actually pretty simple in the sense of we
Chana Schoenberger (02:11):
Have three total world domination.
Jayee Koffey (02:13):
Well, actually it's more about supporting local communities who then in turn helping build resilient economies at home and around the world. For us, we recently rolled out three strategic pillars and they are be more for clients, run our company better, empower our culture at our entire employee base, 50,000 strong around the world, operating in 40 countries and serving a hundred plus markets around the world. We're all united by those three strategic pillars,
Chana Schoenberger (02:48):
So run our company better. I feel like that's a mandate that every banker would appreciate. How do you do that?
Jayee Koffey (02:54):
Yeah, actually Cathinka is responsible for a large component of that. And so Cathinka,
Cathinka Wahlstrom (03:03):
Thank you so much for having us. So I joined the bank last year and I knew the bank pretty well. I had worked with the bank in different capacities and more recently actually been a client. So I knew that I really liked and loved the history and the resiliency and the culture and the clients and all of that. And I think what's been so special about joining now is that we're at a unique inflection point and we're on a transformation, the beginning of a transformation that is really all about what J talked about and being more for our clients and driving growth. So when I came in, I went on a listening tour, learning and listening tour, colleagues, clients around the globe and I'm still listening. And I would say there were some key trends and what we heard from our clients, which are really driving how to be more for our clients and how to run our company better.
(03:56):
So one that we hear everywhere is really about simplification and operating with excellence. And our clients want to work with partners that are safe and stable and resilient and really innovative. So that's a lot of what we're focusing on. We also hear a lot of focus on data and analytics and of course AI and our clients want to make better decisions, they want to innovate faster and they want to manage risk. And then I would say most of our clients are growing, they're thinking about growth and we need to be there to support them. And we are because we're very global and we're there. So it's been interesting to be on this listening tour because what I found is that we can really help them across all of those different areas. So in terms of running the company better, we have significant platforms that really drive our company, but also are the platforms that our clients use to build their clients. And then 20%, we actually touch 20% of the world's investible assets, which means that we have a lot of data and insights and our clients really want access to that. And 40% of our business, 40% of our revenues are outside the us. So we're very global, we are where our clients are, and I think all those things put together help us with those three strategic pillars that we're very focused on.
Chana Schoenberger (05:20):
So is, there's an example, you can give us a story, you can tell us about something specific you're making simpler.
Cathinka Wahlstrom (05:28):
So we have a lot of clients that have worked with us for a long time and we cover them across their entire financial life cycle. Perhaps they work with us across all the different platforms, but then we also have clients that might only work with us in one or two platforms. So we very much focused on connecting the dots for our clients so they know everything we do. So one example that I saw more recently is we are the world's largest custodian and we had a client that was very supportive and liked what we were doing, but they also had a subsidiary that we were not the custodian for. And by having a conversation with them said, they said, come and take a look at that. But we needed to provide also custody services for high wealth, for high net worth individuals, and that really comes from a Pershing business. So all of a sudden we had something that combined what we do in custody with Pershing, with our markets business. And so we see that more and more where clients that we might have served for a long time, but actually they don't know all of our services. So we spend a lot of time making sure that we connect the dots and make it easier for our clients to actually work with us across all our different platforms.
Chana Schoenberger (06:43):
So better selling,
Cathinka Wahlstrom (06:46):
I see it better selling, it's important to do that, have better training, all of those things. But ultimately it's really about helping our clients solve problems and provide solutions to our clients. And then I think they grow and we grow and that's a good position to be in.
Chana Schoenberger (07:01):
So you mentioned ai. There have been a lot of, obviously AI is sort of a buzzword in the industry right now across financial services. There have been a lot of critics of ai, many people are concerned about its energy impact, about how much bandwidth it's taking up, about how it's really taking the attention of corporate managers who might be using it as a way to distract from real world problems with actual humans, actual products. How are you thinking about AI both for internally and with clients?
Jayee Koffey (07:31):
It's a great question. So AI is an important potential existing as well as potential source of innovation. And as a proponent of innovation over the centuries, we can say we're looking at AI very seriously and one most importantly responsible ai. So one of the benefits of AI really coming into fruition in this day and age versus two decades ago, let's say, is the fact that we've had the benefit of investing in a large global bank into the disciplines of data governance, data lineage, really knowing where our data is coming from and understanding the potential implications of misusing that data. So that's number one, the principles and the tenets of model risk management. Of course, LLMs are yet a whole new scale of model in terms of complexity and potential implications. But the core tenets of understanding that models are designed to be fit for purpose and we're really implementing those models in the full purpose way is going to pay dividends down the road in terms of our ability to be able to develop and deploy AI in a responsible fashion.
(08:52):
We recently stood up an AI hub, actually, it's a global hub that's anchored in a number of strategic locations for us as a company. And what we've been doing is not only collecting and curating the potential business use cases, but actually dividing them into themes so that we can better prioritize how we choose to invest in in the ramification, the amplification and execution of those use cases. So it's about taking things one day at a time, having as much transparency and governance as we can around it and with a whole focus back to how can this be better for clients, how can we use AI to run our company better and how can we really make our employees' lives better as well by deploying AI in a responsible fashion.
Chana Schoenberger (09:42):
Any particular real world application that you would talk about at this point?
Jayee Koffey (09:47):
I would divide our use cases probably into three themes. One is really using, harnessing the power of AI to think about how we can structure a lot of information in a digestible, usable fashion. So Cathinka had mentioned our broad reach, so we actually touch about 20% of the world's un investable assets. So with that comes a lot of information, but often in a less structured and linear way using ai, frankly, a range of other technologies and technology tools, we're able to then better structure the information to deliver services to our clients in a more reliable and faster fashion. So that's one. Two is actually using AI to extract information so that we can better perform analytics including predictive analytics. And there are, as you can imagine, a whole host of potential use cases. The third is really about using AI to improve the productivity, but also job satisfaction of our employees. So for example, we have an ability for our employees to ask questions within the confines of the information that we make available to them in terms of what is X, Y, Z solution, how can I better allow my clients to access this product suite or this solutions offering over there that Cathinka mentioned. So those are just some of the ways that we're starting to unpeel the potential of AI.
Chana Schoenberger (11:22):
Interesting. So more of like an HR type looking through the employee handbook, whereas what is our vacation policy or how do I address this problem with clients?
Cathinka Wahlstrom (11:32):
It can be all of the above. The above, above. I have an example from this morning, someone was presenting something on our country strategy and they said, I just need the key principles and bullets on that, and then I need to know who the country managers are. And I said, go and talk to Eliza and he pinged me back. It's all there. So I think it's really a great and productive tool, and there's a lot of enthusiasm. So I think with the AI hub being centralized, this is what they're responsible for is really collecting the ideas, then prioritizing them, then building them and then launching them. But it's very visible and centralized and we have no shortage of use cases. So from a commercial perspective, of course it's terrific in terms of insights that we can provide our clients, but also insights that we have ourselves as we go to market. So a lot of potential, but very, as Jay said, thoughtful.
Chana Schoenberger (12:25):
Yes, we've all gotten used to at this point when you're on an internal meeting and then someone's AI assistant tries to get into the room, you have to decide whether you want to let them in or not. But if they come in, everyone sees that they're there, of course, you usually get a summary of the meeting and they'll summarize next steps for you, which actually it's not unhelpful.
Cathinka Wahlstrom (12:45):
No, and I think we're very used to asking those kinds of questions. So I think it feels pretty normal and natural frozen, but there's a lot of enthusiasm and I look at who's taking our AI courses and all of that, and pretty much everyone is
Chana Schoenberger (13:02):
This is a course scheme that you have internally. We have
Cathinka Wahlstrom (13:05):
A lot of learning internally. Yes, we want everyone to understand the potential and what it can do for their jobs and how they can contribute.
Chana Schoenberger (13:13):
That's exciting. It
Jayee Koffey (13:14):
Is. It is. And in fact, employee development training and development and just overall engagement is one of our focus areas. So along those lines, we recently rolled out a brand new uplifted, expanded learning platform for all our employees, both in terms of content for their day-to-day roles and responsibilities. But if they wanted to become a little bit more acquainted with AI or learn a little bit more about how we operate in a different country than the one that they're domiciled in, all of that's readily available now in BNY learning.
Chana Schoenberger (13:54):
Interesting. Okay. What sort of things are your clients asking you for now that are surprising and different?
Cathinka Wahlstrom (14:03):
So we talked a bit about the platforms, and I think it's important to understand the kind of work we do with our clients. So Jay mentioned that we're the world's largest custodian, but we're also the world's largest provider of issuer services. So depository receipt, corporate trust, CLOs that you hear a lot about in the market. We're the world's largest collateral manager. We settle about 15 trillion in US treasuries every day. We move about two and a half trillion of dollars in payments across our platforms, and we also support about 3 trillion in investment projects into the investment management industry. And we have a private bank. So we touch really almost every aspect of the financial life cycle. So what our clients are looking for more and more is for they want to move faster, they want to innovate, they want to grow, they want to expand. And it's really how we work with them to combine all of those things to help them go to market to help them grow. So it's an exciting time because our clients are growing and we're growing with them, and we have a lot to offer.
Chana Schoenberger (15:18):
So what's something you can offer faster now than you used to be able to?
Cathinka Wahlstrom (15:22):
So there are a lot of things that we do faster. I would highlight one new product that we launched in last year actually called wo. And I think it's a great proof point on how quickly we can move very modern technologies. So WO is our wealth management platform that we launched, and it's really for wealth advisors so they can in one place pull together all their different core applications to respond better to their clients. And that was something we launched last year and we have a lot of clients on that platform now and it's growing very quickly. And of course everyone's interested in the wealth management industry, so it's great to be in the middle of that. So I think those are examples of, I say big innovations, large investments, but we also do a lot of what I would call more incremental innovation, a lot of it together with our clients. We love to co-innovate. We have very active client advisory panels, so we really listen to our clients.
Jayee Koffey (16:27):
And I think whether it's during periods of market infrastructure change, such as the move to t plus one and the upcoming move towards central clearing or during periods of market volatility. So recall the March, 2023 regional bank crisis. I do remember that during those moments, during those moments, and again, having been around for as long as we have, we're not in the business of predicting what's about to happen, but really being able to propel ourselves and therefore in turn be able to help our clients and guide our clients through periods of uncertainty. It's really being able to be there as a source of trust, as a source of scale, as a source of resiliency during times good and bad, planned and unforeseen. And as we go through the remainder of the year, it's a big election year for many countries, including ourselves as we go through the second half in terms of fed decisions around interest rates, those are moments where we want to continue to be there for our clients, both in the US and internationally.
Chana Schoenberger (17:40):
Okay. So from wealth management, let's go to the opposite side of the spectrum, which is financial inclusion. I understand you have some interesting things going on there.
Jayee Koffey (17:50):
We do and we really look at it through a variety of lenses. First of all, by supporting our clients and doing what they do best, which in many cases is really help to protect safe, keep and hopefully grow the economies and the financial assets of their respective client basis. That's super important. Two is in the US we are pretty actively involved now with supporting and partnering with community banks, both in terms of know how transfer and helping them in terms of thinking through how they can continue to grow their footprint in their local communities, but then also looking at over time offering products and solutions that would really help to propel them forward into the future. We're also very proud to be the first GIB to have ran a bond deal where it was exclusively book run by minority led, veteran led, and women led banks. And that was a, I think a momentous occasion actually for the entire industry to say that hey, banks who are run by those leaders can very much do an important landmark transaction on behalf of a much larger bank. And we're very proud to have been able to take that first step on behalf of the rest of the industry, frankly. So those are just some of the ways.
Chana Schoenberger (19:28):
Where do you feel that financial inclusion is going? There's been, we recently did a cover story on racial equity, but that's only one part of it. Of course there were in the last five years, many people have been talking in financial services about we need to get more Americans involved in the economy and involved in wealth and build their wealth. And the actual record on this has not been amazing, despite all the efforts and all the money thrown into it.
Jayee Koffey (19:59):
Look, it's an important ever evolving issue that, look, I think the good news is that many people are now focused on it and it's become a conversation topic, including today. So I think that's foundational, having a resilient and transparent and trustable trustworthy financial system. That's pretty darn important to financial inclusion in my view. Of course, access. So the providing, looking for ways to provide access to the unserved, the unbanked, the underbanked communities. So we are very proud to partner with a firm called Mofi who is all about how to broaden access, establish access to the unbanked and the underbanked. Those are some of the ways, but look, it's a continuous focus area that we are very focused on as a bank, but it takes a global village, so to speak, to really make sure that financial inclusion is here to stay.
Chana Schoenberger (21:04):
So you mentioned that, of course your company, it's an American bank, but you're global, you're in dozens and dozens of countries. How do you get your brand to stand for something all around the world?
Cathinka Wahlstrom (21:19):
Glad you mentioned brand because as I think we launched our new logo in June, BNY and also a simplified brand. And the reason for that is really, as Jay said, to represent that trust and resiliency and innovation that our clients expect of us. And we have operated across four centuries, so we know a bit about resiliency and client obsession and innovation. So first of all, that's happened in terms of the global brand, but day to day, how do we actually show up in markets? We're in a hundred different markets, we have 50,000 employees. It's really important for us to be both global and local, and I mean both culturally and of course the solutions need to be both global and local. So first I would highlight of course our clients and how we look after our clients, how we cover our clients. So our client coverage teams, our client service, our client operations are end-to-end globally.
(22:22):
So it should feel the same way to be covered in New York as it does in Singapore. And that's really important. I would also say we have a very strong global and aligned culture. We recently also launched our refreshed, our new principles that we really live by. They are be client obsessed. They are spark progress, own it, stay curious and thrive together. And I would say these are not simply words on a piece of paper. Our employees really love them, talk about them, live them, and they really inform how we act toward one another, but also to our clients. So I think culture is huge. And then from an acting global perspective, the executive committee is actually very global, as you can tell, but much more global than simply Jay and I. And so I think it comes very natural to us to be out and with our clients and our colleagues around the world. Of course, we love our hometown of New York and the us, but we are on the road a lot. I think Jay, you and I were in Europe the other week, and then I think instead of coming back, you headed out to APAC with another EC member. If you look at our executive committee and our enterprise board, we have 40% women and we also have 40% women when you look at our entire workforce. So I would say we are very global and we're quite diverse as well.
Chana Schoenberger (23:56):
Great. Great. Wonderful. Well, we're out of time, but thank you Cathinka and Jayee for coming in. Really great to meet you and thanks for being here. Thank
Cathinka Wahlstrom (24:03):
You. Thank you so much for having us. Thank you.
