Dermot McDonogh: So that’s — there is a very long answer to that, which we can take you through offline. But the general sense of, to be operational, you have to be doing stuff with us in another line of business, and you have to be making payments and you have to be sticky to us as the firm. And over time, then we classify you as operational in nature, and that helps us on the liquidity ratio standpoint. So if you’re a relatively new client and you haven’t established that track record, then you’re considered nonoperational until such time as you meet those criteria. But as I said earlier, two-thirds of our deposits overall are sticky, and that’s a good fact.
Rob Wildhack: Got it. Thank you, guys.
Robin Vince: Thanks, Rob.
Operator: Our next question comes from the line of Rajiv Bhatia with Morningstar. Please go ahead.
Rajiv Bhatia: Great. Can you comment on the pricing environment within your Securities Services segment? I guess [ACA] (ph) was up 9% against flat fee revenue. So is pricing pressure would you say it’s stable, or would you say it’s intensifying? Thanks.
Dermot McDonogh: So, I would say it’s overall stable, and it’s something that we gave particular focus to last year. And we’ve gone through it client by client, analyzed client profitability, which clients are profitable, which clients aren’t, what we can do in terms of cost to serve, and how do we price on a marginal basis versus a fully loaded basis. So, over the last twelve months, we’ve done a lot of foundational work on how we’ve become more sophisticated in terms of how we price our business and how we talk to clients vis-a-vis pricing. So I would say stable with a positive momentum to it.
Rajiv Bhatia: Great. Thanks.
Operator: And our final question comes from the line of Mike Mayo with Wells Fargo Securities. Please go ahead.
Mike Mayo: Hi. Thanks for the follow-up. At the Boston bank conference in November, Emily Portney, the Head of your asset servicing business seemed very excited about AI and the implications and the implementation of that in the asset servicing business. And I’m just wondering if that excitement is shared throughout BNY Mellon, and what you see as potential use cases and the ability to go from pilots to production. Is it beyond the hype, where is the reality of AI and any specific numbers of what it might be able to do?
Robin Vince: Yeah, Mike. And look, the short answer is, yes, we are excited about AI. We’re excited about it. Over the medium term, we stood up in 2023, what we call the AI hub, where we gathered up a bunch of engineers under sort of top talent leadership to really focus on building out a set of capabilities. They worked with every business and every function in the firm to canvas for use cases. We had hundreds of those. We developed a series of different themes for investment because there’s a lot of duplication actually, across the different use cases when you think about them on a fundamental functional basis. And then these themes for investment are things that we’ve actually been investing in. And so we do have things in production.
We actually have a piece of software today that is creating predictions for clients in our treasuries business, actually, that looks at fails. We’ve talked about that before. That’s a good example, and that was a very early AI implementation that we made. And it’s actually a piece of software that we currently earn some revenue on as part of our CCM business. It also contributes more broadly to market stability, and it’s a great client service. On the flip side of that, the question is going to be, well, for an organization which has as many processes as we have and people performing processes, there’s going to be an opportunity there to create more efficiency. And so we’ve invested in and are investing in that space as well. We’re also investing in the employee experience, the opportunity to have AI do tasks which are mundane or repetitive.
In one particular case, it’s helping our research team get a march on the day, so rather than getting up at 04:00 o’clock in the morning to write research, they get up at 06:00 o’clock in the morning to write research because the AI has given them a rough draft to start with and served up a bunch of data for them. So there are all sorts of different things. Now, we haven’t put it into numbers and so it’s not directly in our outlooks in terms of the way that we’re thinking about it. But it would not surprise me if this is something that over the course of the next decade is going to be able to provide benefit on the top line and the bottom line. And so we’re doing exactly what Dermot said before. We’re not talking too much about things that we’re still working on, that we can’t give you a line of sight into the exact input, but I’m answering the question because you asked it.
But we are excited about this under the hood, for sure.
Mike Mayo: All right. Thank you.
Robin Vince: You’re welcome.
Operator: And with that, that does conclude our question-and-answer session for today. I would now like to hand the call back over to Robin with any additional or closing remarks.
Robin Vince: Thank you, operator. I’d like to close by reiterating that 2023 was an important foundational year for us and that the multiyear transformation of our company is off to a good start. As we begin our company’s 240th anniversary year, we’re excited about the opportunity ahead of us. I’m immensely proud of everything that our people here at BNY Mellon got done over the past twelve months. I’m grateful to our clients who are leaning into their relationships with BNY Mellon and allowing us the opportunity to serve them in even greater ways. And I appreciate the faith and support that our investors, old and new, have placed in BNY Mellon. Marius and the IR team stand ready to assist you should you have any questions. Be well and enjoy the long weekend.
Operator: Thank you. This does conclude today’s conference and webcast. A replay of this conference call and webcast will be available on the BNY Mellon Investor Relations website at 5:00 PM Eastern Standard Time today. Have a great day.
