Bank of New York Mellon Corp at Morgan Stanley Financials Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : All right. Jim, could you take us -- well, we're going to go through the product as we have the discussion. Take us through the strategic priorities you have. You did take on this role about six years ago. James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing July of 2019, just in time for COVID.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. So we're going to unpack that as we go through the questions. But first, I also -- I realize you recently hosted your flagship insight Financial Advisory conference right keying off of the world scene here. And what were some of the key themes that came out of that conference. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JUNE 11, 2025 / 6:30PM, BK.N - Bank of New York Mellon Corp at Morgan Stanley Financials Conference James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Yes. So again, just sort of like unpacking that a bit more. Inside is event we host -- we had it this year at National Harbor. 2000 attendees, actually a few more than 2000 attendees. We bring together a variety of different product providers as well as sponsors that attend that event, but about 2,000 clients. And that's really, obviously, who we want to sort of speak to. In this year, it was, I think, different than I know is different than every year prior. And this was the 26 or 27 year we've had this event. This year, we showed up for the first time as BNY rather than as just a business within the BNY ecosystem. And that was really cool about the event because this year, we had our asset servicing team there, we had our investment management team there, we had our treasury services team there. So we brought together all of those sort of all of my partners and colleagues who really are in the wealth ecosystem in different ways in different forms, but really to demonstrate how BNY can show up differently for the wealth managers that we serve.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And what was the driver of doing that? Is it of bringing all the different services to the Insight conference this year. Is Wove part of that? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Wove was absolutely a part of it. And -- thanks for the product name mentioned. But for those of you who may not know what Wove is, it's a platform that we launched two years ago at Insight when what we are striving to do with Love is to solve what we think is a pretty significant industry challenge, which is the adviser sort of productivity. Our mission is to help advisers serve more people. And the Wolf platform, when we set out to do this, we were looking for sort of breakout growth ideas. And what we learned is that 60% of advisers are frustrated by the technology that they use because of the disparate pieces. And they spend 70% of their time doing administrative tasks. So what better way we thought to do something great for advisers to help them serve more clients and more people but to sort of help them get at that big problem. And so we launched Wove two years ago. It is the entire ecosystem, if you will, that an adviser would need to run their practice from CRM, all the way to billing. And what we decided to do was design a system that was put together with sort of

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And do I have it right that wove drove in 2024, an incremental $30 million in revenues? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing That's correct. And the target, which we're on track for, for 2025 is an incremental $60 million to $70 million of new revenues. And more broadly, that's made up of different revenue sources. And so that's another one of the keys. If you think about our business model, how do we sort of build our economic model, we can build it through selling technology apps. We can build it through adding assets to the platform. We can build it through adding balances to the platform, accounts to the platform. So that's the other cool sort of thing about our business, you talked about our margin at the very top. We have a high degree -- a high level of recurring revenues. And so it allows us to continue to invest in the business and to continue to innovate and deliver products like Wove.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Right. So running at the high end at $100 million. So we should see that in the numbers as we go to because -- well. James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Because as we go through the years see that materialize, yes.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And the underlying question that I'm asking here is how big can will get if we look out to end state. James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing So that's a great question. We did -- when we came up with the thesis for Wove four years ago, we believe that it was a breakout growth idea. Now we've gone really fast to get a product to market. And actually, when we started to build to when we got product to market was just one year. And so we were in market. We started to build in 2023, end market in 2024, and we just had our second -- just passed our second anniversary. The total addressable market, again, back to this point that Robin talks about a lot, which is being more for our clients, we have got 1,300 clients, roughly half of them our US wealth firms, actually, a bit more than half are US wealth firms. That's RIAs and hybrid broker-dealers. So that captive group is all potential opportunity for us, but the other thing about Wove is that we're custodian agnostic. And so you do not have to do custody with BNY in order to take advantage of the wove platform. And we're having some very interesting conversations with firms around the edges of how we might put wove in their tech stack or major pieces of it in their tech stack.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And the revenue model here is app usage? Is that it? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing It's multi. There are multiple parts to the revenue model. It's app usage. Every sort of client that might be onboarded could be paying account fees. They could be adding balances to our Choice money market fund program. They could be adding assets to the platform under a basis point pricing model. So there are three -- at least three, maybe four sort of substantial revenue streams from the product. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JUNE 11, 2025 / 6:30PM, BK.N - Bank of New York Mellon Corp at Morgan Stanley Financials Conference

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. Very good. What other areas of innovation, can you talk about that you're thinking about working on in driving top line growth for Pershing? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Well, I'm sure everyone that's in this chair has talked about AI. So this is the year for AI at everyone at BNY. We have roughly 90% of our employees now have signed up on our own AI platform called Eliza, which is our own hub. 13,000 employees have created their own agents, so I've created my own -- I've created three agents now. And I'll give you a real sort of commercial example how agents are working in AI for BNY you received an RFP that could be hundreds and hundreds of questions with a really tight time line to sort of respond to that, submitting that RFP document into an AI tool, which we have you can get good first drafts of RFP response very, very quickly and allow people to sort of add real value to an RFP. For me, I've put my own goals into the AI -- my AI agent. And I write a weekly report to Robin and in my weekly report versus my AI agent can tell me how I'm doing and what I need to focus on. So it has real sort of commercial impact for us. That's just like a personal example. I gave you an example about how institutionally with we have AI embedded in our financial planning tool in Wove. We use -- we're partnered with a company called Conquest Planning and in Conquest Planning, they have an AI tool. And the really cool thing about this financial planning tool is it allows an adviser to do a plan in what normally may take a couple of hours in literally minutes, 15, 20 minutes, they can have a plan done. So it really apps up what their productivity rate can be, and it really does sort of help us sort of think about what our addressable market is with financial planning because we haven't talked about trends yet in the industry, but as more and more firms shift from brokerage to advisory, planning is going to be a big part of that. And now if you look at our book of business, more of our clients, more than 50% of our clients' books are advisory versus brokerage based and more and more of those advisory books, more than 50% of those advisory books are using outsourced investment management tools and capabilities, another BNY opportunity for us to do these things at scale. But planning led AI is something that really gives us commercial scale and our clients.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. And then as you look even further out, the innovation that you're anticipating is coming off of the AI investment that you've made already? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Yes, I think it's going to -- the use cases for AI in the wealth management business are going to continue to evolve. And at Incyte last week, I talked to the group in my opening remarks. And I did mention how AI is sort of transforming BNY and I made the comment that this could be the Blackberry moment for us if we don't embrace AI, not that we believe that AI is going to take over wealth management. That's not what I'm saying at all. What we believe though -- and I know that Morgan Stanley is very much on this track as well that AI is going to play a much, much bigger role in terms of how do we interact, how adviser interact with their clients and how we operate our business going forward. So I think the use cases are -- they're only limited by what we can think of and how creative we are with prompts.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. But you moved on to the platform model last year? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JUNE 11, 2025 / 6:30PM, BK.N - Bank of New York Mellon Corp at Morgan Stanley Financials Conference James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing We moved in March 26, 2025. We just moved in and the big thing for us is we've organized, reorganized the pushing business into different groups now. We've brought in all of our technology partners. We have a couple of hundred different pods inside of the Pershing business. And so this is really going to sort of change the way that we operate the business.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : All right. Well, thank you for contributing to the goal of positive operating leverage. James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing It's yes. We're reminded quite frequently.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. Very good. So consolidation, a positive for you? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Consolidation of positive. You win some, you lose some. But more and more, we do business with the largest firms. We're very privileged position with many large clients that have been with us for decades. And so we're excited about it.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And what percentage share of your market would you say you have today? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing It varies by market segment. So in the broker-dealer business, we're clearly, I think, number one in terms of market share relative to our competitors. -- in the RIA business, there are two large incumbents that have been in the business forever. I'm trained not to say their names. But they've got great market share, both are great competitors. Their business model is very different. They both have got direct-to-consumer businesses in a variety of other businesses. And again, even though we're number three in terms of like market share by the number of RIAs that we serve -- our optimal client is that $1 billion RIA. There are 1,200 of them. We do business with 600 of the 1,200. So we know who we -- again, we know who we want to serve. We know, frankly, we don't want to serve. We know what our hurdle rate is. And again, we think that we're uniquely aligned with on a values perspective of what they're trying to achieve in their strategy and their business.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. Great. And is there any operational improvements that need to be made to do that? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Absolutely.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : And how are you thinking about the possibility for Alts in retirement accounts? James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Not my area of expertise. I think that there's a lot of momentum. The whispers that I hear is that there's a lot of momentum for maybe first private credit to be a product introduced into retirement qualified plans, but it may be more broad.

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : So you're ready to roll that if you needed now. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JUNE 11, 2025 / 6:30PM, BK.N - Bank of New York Mellon Corp at Morgan Stanley Financials Conference

Question: Betsy Graseck - Morgan Stanley & Co LLC - Analyst : Okay. Well, great. Thank you so much, Jim, for joining us today. James T Crowley - The Bank of New York Mellon Corporation - Senior Executive Vice President and Global Head of BNY Pershing Betsy, thank you.