How the bank founded by Alexander Hamilton is transforming for the future of finance | Next To Lead

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Key Concepts

• BNY Mellon (BNY): The oldest continuously operating bank in America, founded in 1784 by Alexander Hamilton.
• Elisa Platform: BNY's internal AI platform, named after Alexander Hamilton's wife, launched in 2024.
• Chief Commercial Officer (CCO): Katinka Wallstrom's role at BNY, focused on client relationships and growth.
• Platforms Operating Model Transformation: BNY's strategic initiative to de-silo and unify its various business units.
• New Commercial Model: A key component of the transformation, focusing on client experience and cross-business engagement.
• Voice of Client: A crucial methodology for understanding client needs and pain points.
• Mega Trends: Key industry shifts BNY is focusing on, including private markets, AI, digital assets, outsourcing, and wealth services.
• Digital Assets: BNY's involvement in this space, offering custody, settlement, and safekeeping for digital assets.
• BNY Dreyfus Stablecoin Reserves Fund: A money market vehicle for stablecoin issuers.
• Great Wealth Transfer: The generational shift of wealth, particularly to millennials and Gen Z, impacting financial services.
• AI for Everyone, Everywhere, for Everything: BNY's philosophy on AI adoption.
• Digital Employees: AI-powered entities within BNY that work alongside human employees.
• Human Adoption (of AI): Identified as a key factor for successful AI implementation.
• Paradoxical Leadership: The need for leaders to balance strategic vision with operational detail, and high IQ with high EQ.

Katinka Wallstrom's Career Journey and Philosophy

Katinka Wallstrom, Chief Commercial Officer at BNY, shares insights into her career path, emphasizing a consistent focus on clients. Her journey began at Accenture, where she gained deep expertise in capital markets, banking, and insurance. A significant catalyst in her career was the opportunity to work with clients, understand their future needs, and develop innovative solutions. She highlights the importance of taking risks, embracing discomfort, and sometimes saying "not now" to opportunities that don't align with current priorities, as exemplified by her decision not to move to Japan when her children were young.

Her transition to BNY was influenced by her prior experience serving them as a consultant and being a client herself. She describes it as "coming home" and being drawn to the significant transformation the bank was undergoing. Wallstrom's decision-making process often involves trusting her gut instinct over purely analytical pros and cons lists, especially when facing major career shifts.

She believes international experience is critical in financial services, as it provides a deeper understanding of how to execute in different local markets and manage global teams effectively. Culturally, markets differ, and this experience fosters a more well-rounded perspective.

Regarding the impact of AI on consulting, Wallstrom acknowledges its value in developing strategic thinking and execution skills. She notes that while AI might automate some early-career tasks, consulting still offers a strong foundation for C-suite roles. She also observes that BNY is hiring more entry-level talent than before, suggesting a complementary relationship between consulting skills and the evolving landscape.

Her leadership philosophy centers on embracing paradox: being strategic yet detail-oriented, analytical yet empathetic (high IQ and high EQ), and thinking globally while understanding local needs. She is driven by the process of setting a vision, planning, and executing, a framework she attributes partly to her consulting background. She emphasizes the balance between building deep, human trust with clients and being metrics-driven, noting that challenging projects often forge the strongest client relationships.

BNY Mellon's Transformation and Client-Centric Approach

BNY Mellon, the oldest bank in America (founded 1784 by Alexander Hamilton), is undergoing a significant platforms operating model transformation under CEO Robin Vince. The core of this transformation is to de-silo the bank's numerous business units and unify them into a cohesive, client-centric organization. Previously, different departments operated independently, leading to inefficiencies like multiple client satisfaction surveys or redundant call centers.

The New Commercial Model is a crucial element of this transformation, focusing on how clients experience BNY. Through extensive "voice of client" surveys, BNY identified that while clients valued their culture, team, and products, they were often unaware of the full spectrum of BNY's offerings. This insight has driven a strategy to deepen relationships with existing clients and encourage them to engage with more of BNY's businesses.

To achieve this, BNY has restructured its client-facing teams. Client-facing leaders now represent the entire company, supported by deep experts across all business lines. This ensures clients perceive BNY as a unified entity, leading to increased cross-business engagement and improved client satisfaction.

BNY's clients, including approximately 90% of Fortune 500 companies, face significant challenges due to geopolitical volatility and macroeconomic issues. BNY's approach involves not only listening to clients' current pain points but also looking around corners to anticipate future needs. They engage clients through meetings, client summits, and advisory councils to gather feedback on product ideas.

Key mega trends BNY is addressing for its clients include:

• Private Markets: Providing solutions for this growing asset class.
• AI: Integrating AI into services and operations.
• Digital Assets: Offering infrastructure and services for this emerging market.
• Outsourcing: Helping clients manage non-core functions.
• Wealth Services: Supporting the significant wealth transfer and evolving client needs.

BNY's strategy is client-led, with client needs serving as the "North Star" for their initiatives.

BNY Mellon's AI Journey and Impact

BNY is actively embracing Artificial Intelligence, aiming for "AI for everyone, everywhere, for everything." They believe they are among the 5% of companies seeing significant value from AI, having leaned in early. This includes launching their internal AI platform, Elisa, and forming partnerships, such as with OpenAI, and utilizing a supercomputer powered by NVIDIA for scale and innovation.

Wallstrom emphasizes that the primary hurdle for AI adoption is not technology but human adoption. BNY has focused on training its workforce, with 99% of employees trained in AI, and a significant portion of users being outside of engineering.

BNY's AI strategy is built on three pillars:

1. Be More for Our Clients: Gaining deeper client insights through AI analysis of client relationship management tools and satisfaction surveys. This helps identify why some clients are more delighted than others and prioritize future investments.
2. Run the Company Better: Improving operational efficiency through AI, such as faster onboarding, automation of payments, and enhanced currency/payment options.
3. Empower Our Culture: Fostering innovation and idea generation, as seen in a recent hackathon where many ideas focused on client insights.

BNY has developed around 150 AI-powered solutions across the firm, with tangible impacts seen in client insights, operational efficiency, and employee empowerment. Wallstrom personally uses AI daily for data analysis, prioritization, and evaluating new products and investments.

Digital employees are a notable aspect of BNY's AI integration. Over 100 digital employees, with names and emails, work alongside human employees on teams, assisting with tasks like reviewing work. This collaborative approach is seen as crucial for efficiency and innovation.

Despite the rapid advancement of AI, BNY employees are not fearful; instead, they are "leaning in" and focusing on strategic work, with AI automating less exciting tasks. The company reinvests the efficiencies gained from AI back into new client solutions and improved client service, which employees recognize and appreciate.

Human Skills in the Age of AI

As AI takes over repetitive tasks, Wallstrom highlights the increasing value of human skills, particularly communications. This includes checking in with teams, listening to their needs, and effectively conveying the ongoing transformation. She stresses that while AI can assist with tasks like preparing briefings, genuine communication and empathy are irreplaceable, especially during periods of significant change.

Driving Innovation in a Legacy Institution

BNY, with its 240-year legacy, drives innovation by focusing on resiliency, building trust, and continuous innovation in areas like AI, digital assets, and product development. While respecting its history, the firm is forward-looking, aiming for the "next 240 years."

Digital Assets and Future Outlook

BNY has invested early in digital assets, recognizing the industry's direction and client demand. They offer services like custody, settlement, and safekeeping for digital assets, mirroring their offerings for traditional assets. The BNY Dreyfus Stablecoin Reserves Fund is an example of their participation in this space. BNY views this as a transformation, not an overnight shift, and aims to provide both traditional and digital asset services, driven by client needs.

The great wealth transfer is another significant trend BNY is addressing. Their wealth services business is a key area of investment, with an integrated platform designed to support advisors by consolidating client information from various sources, allowing them to spend more time with clients.

BNY's core strength lies in its incredible platforms, where they hold leading positions in custody, securities lending, and powering the Treasury market, touching 20% of investable assets globally. Clients build their businesses on these platforms, enabling their growth and prosperity.

The transformation journey at BNY is viewed as a decades-long endeavor, currently in its early to second phase. The focus remains on deepening client relationships, acquiring new clients, and bringing new, unified, and industrialized solutions to market, powered by AI and technology.