Banking Fintech

Leda Glyptis from BNY Mellon on working with young fintech startups

Leda Glyptis from BNY Mellon on working with young fintech startups. Image: Henk Sijgers, CC
Written by Devie Mohan

Devie Mohan talks to Leda Glyptis from BNY Mellon to discuss innovation, blockchain, startups and the future of fintech.

Leda Glyptis is director of innovation at BNY Mellon and heads up the EMEA Innovation Centre, actively engaging with clients on building partnerships for the future and deepening strategic alignment. In this interview at Sibos 2015, I talk to Leda about how BNY Mellon has embraced financial technology, and is working with startups and accelerators, while having explored the potential of blockchain for quite some time.

Can you explain a little about your role at BNY Mellon and your involvement with the fintech world?

I run the EMEA Innovation Centre for BNY Mellon. We’ve built what we call our ‘next generation platform’, which is a digital ecosystem within which we envisage our customers consuming all of our services in a seamless and frictionless way, and we’re building capabilities and features on top of that.

Leda Glyptis, BNY Mellon, at Sibos 2015 in Singapore. Image: Devie MohanThis means that for a really long time, in software terms, we have been rethinking and building new capabilities on big data analytics. Our platform, our private cloud, and all of the plumbing is to support a new way of delivering our business. We have a very robust digital proposition and digital strategy, which essentially says if everything and anything could be supported by a very robust, digitized ecosystem.

It’s a very long introduction to say that what we do in the innovation centre in EMEA is from day one with the clients: you now have the technology to support more complex demands. And as all our customers are companies, those demands can become very complicated. So, we work on the rapid prototyping and the POC side with clients, leveraging the new capabilities to explore new ways of working, new areas and new products. That is where I sit in the digital strategy of the organization. Under this umbrella is what we call our ‘fintech village’. Our fintech village is best thought of as a curated ecosystem of startups that we find interesting and compelling in terms of their entrepreneurs (who are often very young), their product, their technology, and their go-to market strategy. We mentor them, we work with them, we bring them along to events – it’s another seat at the table.

Sometimes, we do three-way POCs: us, a client and a startup. Sometimes, we broker a conversation and add language around what the startup does for the client to see the value.

Our next-gen capability also comes equipped with an app store, and we’re maturing the offering there. We have small, niche, standalone offerings that our clients wouldn’t necessarily go out to get, but would consume as part of a bigger effort.

Do you think that offering a brand that has trust and security associated with it is another way you can help these startups? Banks can offer this access to clients, which may be very difficult for them to get otherwise.

Yes, I think there are three big challenges on the big corporate side. It’s a needle in a haystack to find the startup you might be looking for, as you don’t even know what you’re looking for, and you didn’t know that capability existed! So, as part of our embracing the new technologies and constantly searching for new ideas, we’re always scouting, whether we like it or not. We open up an access avenue for clients of ours who don’t do that, so they get to hear new things and see new things on the startup side.

The procurement cycle is another thing. The technical integrations of startups onto our app store is actually pretty easy. It’s figuring out how much of value this is to customers and going through all the hoops that a corporation would need to in order to feel comfortable doing business with another entity. Procurement, legal, due diligence checks – all of these things are standard for us, but for a startup with five employees, it decimates their workforce for a while.

That’s not a priority for them at all.

Exactly.

So, what kind of startups are you working with right now? It seems like you’re doing a lot of work with startups: mentoring them, the app store, and so on.

Yes, we are. I mentor across a variety of accelerators, and I’ve worked with a host of companies that wouldn’t necessarily be a good fit for our ecosystem. But out of that universe of mentees, the ones where we’re a good fit for each other, I tend to mentor longer-term. In our fintech village now, we’ve got companies that work in the analytics space that do sentiment analysis, portfolio analytics, carbon footprinting, risk analytics, and so on. All of these are niche offerings that sit very nicely with the data we hold, and where we can add value to the clients. We also have several startups in the retail banking space, as a lot of our clients are interested in those.

You’ve touched upon my favorite topic, which is data. What are your thoughts on the challenges created by an excess of data? And how does your next-gen platform handle data?

It’s one of my favorite topics as well. There are two challenges here, and we’re very close to solving the first one. The first one is the mechanics of capturing, storing, and analyzing the data you hold. Even if you hold it in care of the customer, you still need to act on behalf of the customer. So, the technical challenge of capturing and analyzing that data has been a challenge for the organizations in this industry for a long time. Various solutions have come up recently, and I’m actually excited about those, because it allows us to capture real-time events as well as work on our data lake. Having cracked the possibility to query that data in any way you like, the next question is, what do you want to know?

In our case, with no retail arm, it makes our product more complex, yet the conversations are simpler. It’s a straightforward, three-way conversation – client value, regulatory oversight, and capabilities – and it’s an emerging conversation, because we’re able to see whether we can monetize that value on behalf of the client or for us.

What about blockchain? How can we create use cases that work for your bank? There’s a lot of innovation happening in this space, but how can we make it more usable?

I’m glad you asked. Every financial organization is at a different stage of the journey at the moment. We’ve spent some time playing around with the technology, and that’s the first thing we did. I personally think that is the right place to start. Our IT organization has played with the various protocols and cut code on them. We have an internal recognition scheme based on our own ‘BK coin’, which is well made. In terms of actually building it, we have confidence. But what do you want to build? It’s the same conversation we’re having on the digital side.

I said at my Sibos session that I didn’t necessarily think that the answer will live on the blockchain, and I upset some people
Again, there are two instances of it. Where can you use it to make today’s problem less of a problem, and where can you use it to create opportunity? This conversation, to me, is one of the more challenging ones. It forces all of us to rethink what the industry is for.

I do think that this question has been very much accelerated by this technology. I said at my Sibos session that I didn’t necessarily think that the answer will live on the blockchain, and I upset some people. Yet, this philosophical rethink of where the value lies and how we repackage that value is important. We have technical capabilities that can change a lot of what we do. We can visualize a future on the blockchain. The challenge is the use case that will allow us to unlock value before we get to the end state. For me, the answer is collaboration. Unless you get a few players around the table to map out what value will look like once this technology is connecting us, we will not get to the use case that will be valuable today, and tomorrow, and all the way to the end.

And are there any other technologies that you think would have use cases like that, other than blockchain? Data analytics, of course – you’ve talked about it – but any other potential technologies of the future?

Less about the future and more of the present! My personal favorite is the secret weapon of redefinition, the almighty API. We’re all excited about the capabilities it brings and the radical transformation of the way we package and deliver the services it brings. If you want something that’s transforming your business today, there it is. It’s happening, and ironically, when the blockchain/distributed ledger future arrives, we’ll be prepared. We will have packed our bags and built our infrastructures. The advent of the API wasn’t as much talked about, because the API has been used in other things for a while.

And some banks are using it more than others.

Exactly. Internally, I would say most banks are using them somewhere. Yet, to deliver services to your clients, it’s a radically different way of structuring your client relationships and your product. Everyone, including me, is talking about the blockchain universe, but the silent revolution is the API.

Do you think regulations have a major role to play?

Regulation has a major role to play across the board. As our regulators become exceptionally future-proven and technologically savvy, these conversations are actually very creative. I personally like to have the regulator in on day one – hour zero – because this frames things so much better.

That’s because you’re in the UK. If you’re in other countries, you probably wouldn’t be saying that.

I’m Greek. I wish the regulators had been there from day one! There is absolutely a best practice standard setting out of the UK regulatory world. Technology and business sit side by side when we’re talking about digitalization.

Which meant that, when we started wrapping our infrastructure and our layer of APIs, the business knew what that meant in terms of how you will deliver value, how you need to think about your product, stack and all the rest of it. That’s extremely powerful, but I see organizations in our industry going down that path without the prior commitment to what being an API-focused organization means.

What are the gaps you think fintech startups can fill? What do you need, and what would you like to see?

Across all the markets I look at, the startups do either deep-end analytics or UI-driven client experience overlay functions, and increasingly you get the blockchain world because it fits it into the front-end to the back-end infrastructure plays. And the front-end wizard is great: you can plug into things.

The back-end analytics are a much harder sell, but it can happen. The blockchain universe is what it is. The companies that seek to work with banks, they fall into those three buckets. Most of them are market-making at the same time as product-making. Don’t build the product and the market at the same time!

Realistically, large organizations have a whole host of challenges: regulatory and market pressure challenges, reconciliation, legacy system – most of that stuff is boring, and startups tend to do cool stuff. But if you really want to give banks something they’re hungry for, work on the boring stuff.

How do you work on the boring stuff? You can’t throw the legacy systems away, nor throw away the specialized skills needed to run them, which is a big cost. You can’t plug in fintech so easily, can you?

We have our digital ecosystem overlay. They plug into that. So, when the time comes to sunset them, we have that seamless experience for our clients. We’ve done this for ourselves, and because we’ve built it, we can do it for our clients. That was an opportunity missed for a startup that was interested in plugging that gap. The gap is now plugged by someone who has scale, right. Sorry, startups, BNY Mellon is now a fintech.

Did you do it all in-house?

We’ve done it in-house. You should definitely come and see it.

I will. You should sell your digital overlay concept to the other banks that you work with.

Well, our digital overlay is very much there for our customers to use, in their interaction with us and as an ecosystem – in the understanding that as the world evolves, very few of us will need to provide infrastructure. Yet, we’re in the infrastructure business, so we’re going to build it.

We have applied (what we call) a ‘digital pulse’ to our data lakes, or any body of information. It’s an analytics capability, so it’s not married to the data. It captures 1.3 billion events, but this number keeps going up. We had a non-banking data scientist working on this. It has a visualization overlay on it that makes it easier for the end-user to drive, and we found a lot of very interesting things about ourselves. We also found even more interesting things about our customers, so we started sharing the insights using this tool. Soon, we’re building interactive dashboards with clients.

This brings me to the culture – the human element. How difficult is it to sell innovation in a big bank?
We have a truly visionary CIO who has the ability to design an infrastructure that’s very different to how we’re used to doing it
Innovation as a cultural project, and effort. It has been championed in our organization by our president throughout her career. She always had innovation initiative, innovation programs, new ideas, competitions, mentoring in ideation schemes, and so on. Even if you didn’t participate in those, it was implicitly understood that the company, at the top of the house, ordered these things and that it mattered. We have a truly visionary CIO who not only had the imagination, the creativity and the strength to visualize a future that started with a blank sheet of paper, but also the ability to design an infrastructure that’s very different to how we’re used to doing it.

Right now, to sell this internally isn’t a hard job because you’re delivering what the clients want with a powerful infrastructure that’s actually a neater and more efficient way of running a business that it’s in line with the market. It proves to every employee that the cultural piece was actually true, because look how we’re changing.

Going back to the fintech world, do you have any personal favorite startups?

I do have quite a lot of favorites, which makes me fickle probably, but I’m a big fan of TradeBlock. I like what they’re doing, the founders and their style. TradeBlock was one of the first companies in the space I mentored. I like the maturity with which they think about what they do. I really like companies like ET Index, who do carbon footprint portfolio analytics. I like Heckyl. We’ve got a pilot integration with them on our app store.

Then there’s a company called Parity. It’s a financial behavioral responsibility tool that sits on top of a professional loan, and it’s beautifully executed with a deep understanding of the market that it’s servicing. A very clear go-to market, clean kit, and good tech provides a possibility for a credit scoring system as an added bonus, and I like what they’re doing.

New markets start emerging even if they’re tiny segments. Then there will be first-movers, and they will have learned from the best, both from the institutions and from the startups. This doesn’t mean there won’t be any survivors. There will be, but the ecosystem as it is today isn’t what we will be seeing in a couple of years’ time.

Main image: Henk Sijgers, CC0

About the author

Devie Mohan

Devie Mohan is a fintech industry adviser and analyst based in London. She is the co-founder and CEO of Burnmark, a fintech research company, and is a panel member on the ING group Think Forward initiative on better financial decision making. Devie is actively involved in the fintech community and has been listed in CityAM's Top 10 Fintech Powerlist, and in Innotribe's Fintech Power Women list.

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