'Resilience matters' amid market uncertainty: BNY Mellon CEO
Artificial intelligence, cryptocurrencies, and the Federal Reserve's interest rate cut timeline have controlled conversations in political and business circles. Bank of NY Mellon (BK) CEO Robin Vince joins Yahoo Finance's Julie Hyman and Brian Sozzi at the World Economic Forum in Davos, Switzerland to discuss this range of topics, including why AI "is all the rage" while clients remain "a little cautious" on adoption.
Vince says the 240-year-old firm is continually trying to "reinvent" itself, citing their new AI Hub as the latest transformation, allowing for heightened efficiency and more in-depth analysis of market trades.
On the topic of interest rates, despite acknowledging headwinds, Vince says "the Fed has done a pretty good job navigating everything." He hopes for a soft landing scenario but explains BNY prepares clients for uncertainty as rates could rise or fall. Ultimately, "resilience matters," Vince explains.
It's all part of Yahoo Finance's exclusive coverage from the World Economic Forum in Davos, Switzerland, where our team will speak to top decision-makers as well as preeminent leaders in business, finance, and politics about the world’s most pressing issues and priorities for the coming year.
Watch this full episode of Yahoo Finance Live here.
Editor's note: This article was written by Angel Smith.
Video Transcript
BRIAN SOZZI: One lesson we're learning here at the World Economic Forum as part of Yahoo Finance's coverage is that some of the most largest and oldest global companies are being completely reinvented by artificial intelligence. Let's talk to one of those companies. That is BNY Mellon President and CEO Robin Vince. Robin, good to see you here. Your company's 240 years old. Did we get that stat right?
ROBIN VINCE: Yeah, you did. It's great to be with you, by the way. Thanks for having me here in Davos.
Yeah, this is our 240th year. We were founded by Alexander Hamilton. We're actually the oldest bank in the United States. But to your point earlier on, we are in a transformation.
BRIAN SOZZI: How do you-- how are you implementing AI in a company that is 240 years old?
ROBIN VINCE: Well, you only get to be 240 years old by continually reinventing yourself over the years. We've been part of a lot of innovation and transformations over the course of our history. And last year in 2023-- we just announced our results last week on Friday-- we really started to invest quite deeply in AI. We created an AI hub, and it's creating benefits for our clients. We have a service now that we deliver to clients that helps them to be able to see in the Treasury market what's likely to happen next in the post-trade process.
We also use AI to be able to help our research folks get a start on the day, a draft writing of the research. And then they come in a little later, and they can obviously polish it up, improve it, but it creates efficiency for them.
JULIE HYMAN: What are you hearing from your clients about these kind-- I mean, it sounds like you're using it a lot internally as well, but we've been sort of trying to figure out what the push and pull is when it comes to these type of AI services.
ROBIN VINCE: Well, AI is all the rage at Davos this year, as you probably know. The main promenade sort of converted from crypto to AI, it feels, for the week.
But our clients are excited. They're curious. They are a little cautious. They're not quite sure how it's going to happen, and that's where we bring our platforms at BNY Mellon to them to help them to navigate all of this because that's really what we are. We're a platforms company that helps our clients to navigate what's going on in the world. And so in the case of AI, they do look to us to help create solutions that ultimately is going to make their lives easier in the investment process.
BRIAN SOZZI: You mentioned crypto. Are you ready to make a big bet on crypto in light of what we have seen with the spot Bitcoin ETFs?
ROBIN VINCE: Our focus has always been, Brian, on the digital-asset ecosystem more broadly, tokenization. How can assets that maybe haven't been part of the financial system be brought into the financial system and be easier to transact, to move, to manage, to store, which is really the heart of our business? And so that's our primary focus in the tokenization/digital-asset space.
JULIE HYMAN: So we've talked about AI. We've talked about digital assets. Let's talk about the core business of banking and what affects it, namely interest rates, right? You've talked about that your net interest income is going to come back a little bit as we start to see changes in rates. What are you expecting on rates this year?
ROBIN VINCE: Well, we have a great vantage point as a company, and we're very privileged with our business, with our clients. We touch about 20% of all investable assets in the world, and about 40% of our revenues come from outside of the US, so we have that global reach. So the answer on rates depends market by market, but to the US--
JULIE HYMAN: Let's talk US.
ROBIN VINCE: Sure. So in the US, I think the Fed's done a pretty good job in navigating everything that they've had to deal with. You know, we had COVID. We had a surge in inflation. We've had the longest, quickest campaign in rate rises in 40 years. We've talked a lot about that. And so far, people are still talking about the possibilities of soft landings.
Now, that's going to be super hard to pull off. It hasn't happened in recent times, certainly not with this backdrop. We're rooting for it, no question, but we're in the preparedness business. So we help our clients to be able to manage whether or not rates are going to go up or down.
Now, it's our house view that we will see rate cuts this year, maybe a little less than what the market's expecting right now and maybe a little later as well. But, you know, we'll have to see.
BRIAN SOZZI: We're hearing from a lot of international investors a more level of concern as we near the presidential election. When you talk to those international clients, are they wanting to or do you think they'll pull back on how much they're investing in the United States in the lead up to the election?
ROBIN VINCE: Well, I was in an event yesterday, actually, and it was interesting. There were several European leaders there, including some heads of state, and there was this conversation around the fact that people around the world have to prepare for the different eventualities of what can happen in politics. You know, we have half the world's population going into elections this year, so it's not just about the US. We've got other important elections in other places.
But I think it's right, and this is again back to us. We're in the preparedness business. Our clients need to be in the preparedness business. They expect us to help them sort of navigating whether something happens one way or another way. You've got to be prepared. You can't roll the dice on these types of things.
BRIAN SOZZI: How are they preparing?
JULIE HYMAN: Yeah.
ROBIN VINCE: Well, you can be prepared by looking carefully at your business, by investing in whether rates might go up a little bit or whether they go down a little bit. Is the stock market going to have a good year, or is it not going to have such a good year? How do you get your business-- resilience matters. We saw-- we learned those lessons in 2023. We saw that if you're not prepared from an asset liability management basis, you can get yourself into trouble. That's what happened in the spring. If you're not operationally resilient, you're not there and ready for cyber. We help to try to wrap our platforms around our clients so they can be resilient to more types of things.
BRIAN SOZZI: Lastly, quickly before we let you go, do you expect a more risk-off environment in markets in that month or two before the election?
ROBIN VINCE: Look, the way that markets play out, markets don't like uncertainty, and so we'll have to see how the election in the US is playing out at a given moment in time, and markets are going to react to that. But markets have a pretty good ability to look through events and look through into the future, but uncertainty isn't helpful. And so again, you've got to be ready for that.
BRIAN SOZZI: Unhelpful indeed. BNY Mellon President and CEO Robin Vince, good to get some time with you here at Davos. Really appreciate it.
ROBIN VINCE: Great to be with you Brian, Julie. Thank you so much.
BRIAN SOZZI: Thank you so much. Appreciate it.
