Rob Wildhack: Good morning, guys. I appreciate the update on the strategic priorities. I’m curious on the do more for clients front, how is the progress you’ve made and are making there manifested itself so far? Are you seeing an uptick in organic growth, new business wins, anything like that? And then the obvious follow on from there is, when do you think that we could expect to see that progress manifest itself and whether it’s fee revenue growth or operating leverage more broadly? Thanks.
Robin Vince: Yes, it’s an important question, Rob. So the way that we have laid out be more for our clients internally is in a few different threads. So the first is delivering more to existing clients and you’ve heard from us before on this, so many of our clients have a single business relationship with us, a single product, single solution. And so we just have the opportunity, frankly, to have them be able to do more things with us by connecting the dots and offering more to our current clients. I’ll give you a stylized example. So if you’re an asset servicing client today, you probably do some securities lending with us. You may or may not do some foreign exchange with us. If you do those two products with us, why wouldn’t you do some margin segregation with us?
If you do margin segregation with us, you’re in our collateral ecosystem, why wouldn’t you do more collateral management with us? If you’re in that ecosystem, you’re starting to touch the cash ecosystem, and so why wouldn’t you also be open to some of the cash liquidity related solutions we have? And if you’re touching that, you’re adjacent to Treasury Services, and so why wouldn’t you also be interested in some of our treasury services products. And so that’s exactly. The fact that we haven’t done that is the ultimate manifestation of the problem with silos for a company like ours, because our businesses are pretty adjacent to each other. So that is a very important focus. It is the top priority of our new Chief Commercial Officer to really drive the operationalization of making all of that a reality as opposed to just a sort of an internal call to action in the company.
The second thread is developing new products and connecting adjacent products so that, different than the first example, so that two things which are inextricably related to each other could potentially be sold as a solution. If you look elsewhere in the technology industry, there are often multiple pieces of software that are bundled into one aggregate solution which is actually what clients buy. We haven’t done as much of that because our products have been strewn across the company in their respective silos. So being able to look more horizontally, we get to be able to gather up the products and think about the world a little bit more along the lines of solutions. And you’ve seen us do that with some of our asset servicing clients more recently, where we’ve done these bigger, more bundled deals, and there are more opportunities for that.
And then the third opportunity is to just win more market share and brand new clients. Now to be fair, we do know a lot of the clients that are out there in the world, 90% plus of Fortune 100 companies, 97% of global banks. So that’s not the biggest opportunity of all of them, but we want to be in the hunting business as well. And so we’ll go find those clients that we don’t currently do business with and actually engage them as well. So there are a lot of threads under that whole umbrella of being more for clients.
Rob Wildhack: Thank you.
Robin Vince: Thanks Rob.
Operator: Our next question comes from the line of Gerard Cassidy with RBC. Please go ahead.
Gerard Cassidy: Thank you. Hi, Robin. Hi, Dermot. Robin, can you expand upon your comments about FedNow? You touched on it, you were one of the early adopters who were in the test phase and just implications are once this goes live throughout the system.
Robin Vince: So immediate payments are one of those disruption opportunities that don’t come along that often in the overall ecosystem. And you have to remember that the US is actually less advanced in some respects in terms of the speed and the efficiency of payments versus some other large countries around the world. And so, we look at this as saying, well, we have a large installed client base that’s pretty rooted in some of the classic payment methods. We are a large check clearer, we’re a large payments provider. And we also have a pretty un-conflicted approach because we’re not really in the credit card business which creates a little bit of fee disruption risk if you are in that business to embracing instant payments.
And so, we identified this some years ago that this would be an opportunity that we would want to participate more in and that’s exactly what we’ve been doing. So we’ve been live on the clearinghouse rails for a while. We’re now live on the FedNow service. Those are essentially competitor instant payment services to each other. But now we are going to be focused, as I think the rest of the industry will be, on the network effect that’s going to be required to really adopt these instant payment rails. And so, we’re a provider to small and mid-sized banks, helping them to access the rails. We think there are a bunch of things that you can do with these new rails that you couldn’t do with some of the old rails. Request for payment is a great example.
The opportunity to really deliver e-billing, instant requests for payments that can be met with instant, perfectly timed payments. There’s a lot of control there. There’s also some security opportunities. Who wants to give their bank account and ABA number out and their credit card number out when you’re dealing with various billing-based solutions. And so, operationalizing all of that with our clients is important. We just launched Bankify, as I mentioned in my prepared remarks, that allows consumers to be able to use these rails a little bit more efficiently. And so, look, it’s early days in this disruption, and I don’t want to call exactly how and when it’s going to occur, but we feel over time, this is a good new technology, and as we do see more network effect, and these use cases start to go live, it provides a lot of client value.
And so at the end of the day, I think that client value is going to win out and we want to help them to do that.
Gerard Cassidy: Great, and then Dermot, you touched on with deposits, the challenges the banking system faced earlier in this year and Bank of New York was looked at as a safe haven in some people’s minds and your deposits have reflected that as you pointed out. Can you share with us if QT stays with the Fed through the end of next year, what kind of impact are you guys thinking that that could have on deposits throughout 2024? Thank you.
Dermot McDonogh: So I think it’s a bit too early for me, Gerard, to kind of give you guidance for 2024 on that. But like I said earlier, we kind of feel we’ve reached a more kind of normalized level given what happened in March and then the debt ceiling and who kind of knows what’s going to happen from here. But our balance sheet is positioned for higher, for longer. We have a lot of the balance sheet in cash. Our fixed income securities are going to roll off a quarter a year over the next few years, and the pick-up and yield from that is about 200 basis points to 300 basis points. So when we look at the balance sheet together, we kind of feel very good about our NII for the next while. January will be when we give you more detailed guidance for how we think about it for 2024, but our deposit base and how our clients are in the ecosystem.
