Innovation: A Catalyst
for Collaboration

Mal Cullen, Chief Executive Officer

bulbThis past November, with little fanfare, MIT’s Sloan School of Management introduced a new course focusing on financial technology applications. With the aim of exploring how technology can improve areas such as consumer finance, payments and trading, this is the very first graduate-level course to focus on FinTech in the US. In a sense, it also marks a new era for financial services in general, one perhaps long overdue, in which the market embraces disruptive technologies and their ability to advance financial services. Institutions either embrace technology or risk being left behind.

Consider just how much capital is pouring into the sector, all with an eye on automating, digitizing and optimizing financial services. In the third quarter of 2015, $4.85 billion in investment funding flowed to venture-capital-backed FinTech companies, according to research firm CB Insights. This eclipses the total funding dedicated to the segment in all of 2010 and 2011 combined. In the past two years, FinTech startups have attracted more than $16 billion.

Make no mistake, the future is already here—it is just not as evenly distributed as many in the sector might like. For instance, advances such as blockchain technology and the ongoing evolution of big data promise to irreversibly change the industry. The question then becomes not what the future holds but how will current business models adapt to harness and profit from these developments. Yet, while most other sectors fear disruption, the innovation that ensues in financial services will more likely serve as a catalyst for collaboration between incumbents and startups.

Growing the Ecosystem

At Eagle, having made the journey from startup to now serving as a pillar within BNY Mellon Technology Solutions, we understand the challenges and opportunities facing early-stage companies. The path for those that survive will not necessarily rest in unseating the global investment banks, brokerages or investment managers. Rather, their future lies in working with these institutions to develop solutions that improve customer outcomes, enable new services, and drive efficiency.

When Apple introduced Apple Pay last year, it did so in collaboration with the major credit cards, the largest U.S. banks and an assortment of retailers. The consensus building that Apple put into the effort was as thorough as the technology behind Apple Pay and Apple spent the better part of a year working with retailers to ensure the launch went off without a hitch. They took the same approach this past year with the “version four” release of Apple TV, which unveiled an app store for third-party applications.

In these cases, Apple realized that a strong ecosystem was essential for success—a realization that also holds true in financial services. Long-term clients are not merely seeking features and functions. They want solutions that incorporate best-of-breed technology, whether it comes from one provider or many. The key is that it all works together seamlessly.

This is core to what we do at Eagle to support our data management, investment accounting and performance measurement offerings. For example: Eagle works with MicroStrategy to augment reporting across multiple platforms; Eagle works with Interactive Data to address Solvency II compliance in Europe; and Eagle works with AIMS-STM so that clients active in Australia understand and meet their after-tax benchmarks. The list goes on and on.

In many ways, BNY Mellon has adopted the same approach. Beyond backing Eagle, BNY Mellon has dedicated significant capital and resources to building out its own technology, whether in the form of internal platforms or external offerings. BNY Mellon Technology Solutions (BTS), formed last year, is tasked with leveraging these many technology investments within BNY Mellon to create an encompassing ecosystem and thus a more powerful value proposition for all clients.

To cite one example, well over 1,000 professionals are dedicated to the performance, risk and analytics space between Eagle’s performance and risk solution team, BNY Mellon Global Risk Solutions, Hedgemark and Albridge, all of which are BNY Mellon subsidiaries. While the BTS group was only formed last year, the collaboration among these groups is leading to a much greater performance and risk solution.

As Apple demonstrates, an expansive ecosystem can be a game changer. Within the broad financial services universe, early-stage companies will likely have an opportunity to succeed within such an ecosystem.

We see groundbreaking innovation every day. We see it internally as we break new ground on enhancements to our solution set; we see it at BNY Mellon, whether it is at the innovation center in Silicon Valley or alongside our colleagues in the BTS group; and we see it outside of our doors as we work with startups and other third parties to assemble holistic solutions that push our industry further.

Innovative companies do not fear the future—they embrace it and leverage the new possibilities. At Eagle we understand that there is a race with early-stage companies to better serve clients and meet their evolving needs. Yet with a powerful ecosystem that enables innovation, success will be found alongside startup solutions. Seeing the beginnings of a new era of collaborative innovation, there is much to be excited about in 2016 and beyond.

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