Exclusive: ‘Bringing data into custody’ – Saket Sharma, BNY Mellon in “The Fintech Magazine”

Saket Sharma, Chief Information Officer of Treasury Services Technology at BNY Mellon, explains why capturing and controlling ever larger volumes of data is crucial for customer protection and business efficiency

Custodian banks have a special duty to protect the financial assets of their customers – and none more so than BNY Mellon.
As the world’s largest custodian, it administers $35.8trillion of assets (as of Q3/19) on behalf of institutions and individuals worldwide. This requires a sophisticated approach to data management and analysis, using the latest technologies to safeguard customers, minimise risks and inspire trust.

Over the last decade, custodians have benefitted from huge advances in technology and the globalisation of the investment industry. Data is at the heart of this transformation, says Saket Sharma, whose role as technology CIO of the New York-based bank’s treasury business involves overseeing data strategies across payments, supply chains, electronic banking and trade finance.

“If you look at how data has evolved, it’s the three Vs: volume, variety, velocity,” says Sharma. “There’s no disputing the first one, as data volumes have been multiplying at a phenomenal rate every year. Variety means the growth of structured and unstructured data. And velocity is the speed at which information is moving in the digital world, shaped by the consumer expectations of real-time data and on-demand service. To harness the power of data and stay competitive, you must have a clear strategy for data.”

It’s a challenge that faces all businesses today, and particularly custodian banks as the pressure on their middle offices increases. Effective data control means meeting regulatory requirements and ever-more demanding service levels. Through advanced data analytics and information management, BNY Mellon is building transparency, risk mitigation and market intelligence.

“We need data to tell a story,” says Sharma. “We have to dig deep and understand everything from the customer perspective. To help customers in their journeys, we have to find the right insights, the right data for effective decisionmaking.

“For example, when we do payments, they go through multiple hubs before they are cleared and settled. You have to negotiate the Office of Foreign Assets Control (OFAC), know your customer (KYC) regulations, liquidity checks, fund control checks, and so on. In all these areas you must find ways to optimise and provide greater visibility.”

Trust and boundaries

The type of data BNY Mellon captures comes from a wide variety of sources and covers, among other things, reporting on unencumbered assets, portfolio and asset-level transparency, hypothetical trading simulation and pricing models, and compliance monitoring and exceptions processing.

Speed and accuracy are vital, as is the ability to manage data from disparate sources that may lack standardisation. But, above all, Sharma emphasises that trust is the foundation for all BNY Mellon’s activities. In a world increasingly shaped by technology, customers must feel confident that digital business also means ethical business. And, as artificial intelligence (AI), machine learning and data analytics became part of the financial fabric, there are concerns that they may undermine individual liberties as much as they empower banks and financial institutions to help their customers.

BNY Mellon is fully aware of the need for clear boundaries between privacy and how data may be used, and is working closely with regulators and policymakers to ensure the right balance. For instance, it is part of a consortium recently formed by the Monetary Authority of Singapore (MAS), which is developing an ethical control framework called Veritas. With the aim of strengthening internal governance around AI and data management, the Veritas framework enables financial institutions to evaluate their AI and data analytics (AIDA), based on four main criteria: fairness, ethics, accountability and transparency (or FEAT).

BNY Mellon’s guiding principle is being trusted to ‘always do the right thing’, which Sharma says is a fundamental part of its approach to KYC. “We look closely at the data points we’re validating,” he says, “to make sure the right KYC procedures are in place. And we make it seamless for our customers, so that they are more comfortable. Cloud technology is now a great enabler, bringing both agility and a solid platform for value-added products.”

The bank operates a Cloud-based platform called Nexen. Launched in 2015, it is part of a digital transformation programme that began in 2012, to remove silos and streamline the bank’s systems. By consolidating systems and services through Nexen, supported by a development team of more than 10,000 technicians who are building apps to a common standard, everything is now easily and securely accessible by clients in their preferred format.

Nexen is an open-source solution built with application programming interfaces (APIs), and includes data analytics through a service called Digital Pulse. This tracks activities, processes and transactions within the bank, yielding predictive analytics that improve operational efficiency and address customer pain points.

Sharma says that Cloud computing gives the bank an architecture to build systems that are elastic and can scale. He underlines another important feature, too – interoperability.

“Whatever route a customer takes to interact with us, we need to make it smooth and seamless,” says Sharma. “Whether they come via an online portal or API connectivity, the channel must offer seamless integration with their products and services.”
A vital part of the process is joining all the data dots, he says.

“For any organisation to achieve optimum performance, it must develop a data-driven culture, to bring everything together and create the complete story. Data determines the decisions you make. If it’s unconnected, you won’t make the right decisions.

“Data is your intellectual property, your core asset. Channels come and go, but everything flows from what you do with the data. How you apply it, and the capabilities you build on top, is what makes the difference.”

Collaboration is one way to gain even greater value, says Sharma, and fintechs make this possible because their business model is based on integration with other service providers. APIs provide the glue to hold them all together.

“You can integrate with third-party providers and so the ecosystem grows in size and value,” he says.

Collaboration is key

To encourage innovation, BNY Mellon has launched its own fintech convention. The first event, Fintech Connect 2019, was held in early November and brought together a diverse group of fintech companies and private equity investors, venture capitalists, with BNY Mellon clients.

Fintech Connect explores new ideas and business opportunities for collaboration and innovation.

The bank has its own innovation centres in the United States, Europe, the Middle East and Africa, and Asia Pacific. All have close contacts with thought leaders in the open-source culture and the digital economy with a key focus on machine learning, advanced data visualisation and semantic data modelling to power data and analytics tools.

Sharma thinks BNY Mellon will always support collaborative models, and continually explore new partnerships that can build on the versatility of APIs. The Nexen platform is a prime example, as the open-source technology can generate a wide variety of API developments, and customers can access more than 100 APIs through the Nexen API store.

Recent examples of collaboration include BNY Mellon’s announcement, in November 2019, that it is broadening its digital capability through partnerships with four platform providers. Working with EZOPS and Kingfield, the bank will be able to use machine learning and AI for greater operational efficiency, while Caissa and Two Sigma will help provide enhanced risk solutions and transparency for customers.

BNY Mellon has also announced that it is cleansing its data so that it can be used company-wide. The project will last a couple of years and will make data usable across different business units. Another initiative is to develop custodian-agnostic data capabilities, which involves gathering asset-servicing data from clients and competitors and using it outside the core custody business. This is an evolution of the bank’s Eagle data management business, which operates alongside custody.

BNY Mellon sees itself as a technology company in the charter of a bank, working to improve the effectiveness not just of its own business but also that of the financial markets more broadly. With its commitment to transformation, reinforced in 2018 by a strategy called ‘Digitizing This Very Bank’, it’s setting itself a high standard.


This article was published in The Fintech Magazine: Issue #15, Page 60 & 61.

Author: Eleanor Hazelton

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