Thank you for the applause. Hi everybody. Thank you Robin for doing this.
It's great to be with you Leslie. Great to be with everybody.
So this is so well timed because I just spent essentially a day in your offices downtown and you have such a storied history, the oldest bank in the US and you are investing heavily in AI. You're leaning into new technologies. Obviously we are here to talk about digital assets. So maybe we just kind of start by level setting how you're thinking about digital assets, how BNY is really leaning into these new technologies.
Well, maybe I'll just set the scene by just reminding people who BNY is in the context of innovation. So we were founded 240 years ago as the Bank of New York. We're the oldest bank in the United States. We were founded at a time when there were 20,000 people who lived in New York. It was a hundred years before the commercialization of electricity. And if you just think about what the technology of the day was, it was basically quill and ink. And cut forward a couple of hundred years, we bought our first computer in 1955. We started processing using technology, really proper technology, US government securities in 1977. We did our first internet-based securities transaction in the mid-90s, well before the bursting of the dot-com bubble. So, we are a firm that's grown up with a whole bunch of different technologies and we've learned over a long period of time that you get to be a durable long-term company when you innovate and when you really take advantage of the latest and greatest of what's available. And so, our AI story has been one of three years really investing and innovating. And our digital asset story is very similar. We were the first large bank to offer digital asset custody. And we're excited about digital assets, AI, other technologies, and how they come together over time.
Now, I know you weren't around for a lot of those technological innovations, but it really feels like with AI and digital assets, we're at a pretty unique moment in the history of financial services. How would you kind of characterize that relative to all of those technologies that you outlined throughout your history?
It feels to me like an incredibly exciting time. I think there's a risk that we could somehow fall into the trap, and this has been true over the ages, that say this time it's different. This time the whole world has completely changed because it's the moment that we're living in. So it always tends to be that the present is the most clear and sort of feels like the most impactful. But I do think these technologies are truly, truly revolutionary and the fact that they come together at similar times from a maturity point of view, digital assets technology, blockchain, the opportunities to do things and innovate financial services, reinvent, reimagine is very exciting. It's been going on for a while. I think we're hitting a point of maturity and acceleration and then obviously with AI it's an even quicker curve and it's accelerating but those two things over the course of the next five or 10 years and as they come together, agentic commerce, quite molecular opportunities with digital assets, seeing how the two things come together, I think it's a very, very exciting time for people, for users of the technology but also for innovators who want to actually be part of that innovation story. If you stick your head in the sand and you think it's not really happening or somehow it's not for me or it's just a piece of tech, I'll leave it to my engineering teams. I think you're just missing an opportunity. We certainly at BNY don't want to fall into that trap.
Yeah. You have AI boot camps where you gather people together to spend a whole day learning to be experts, not just engineering employees, but the lawyers and others.
Because that's about culture, right? And in fact for us as a company, and we have learned this lesson, which is it isn't just about the existence or availability of a technology. At the end of the day it's how does it get incorporated, how does it get embedded, how does it actually change things. That's about adoption, that's about use, that's about use cases, that's about problems that need to be solved or applications for technologies or capabilities that can actually make the world better or make customers' lives easier because we're actually solving problems. And so client listening, how does the technology ultimately change use cases so that we can have more mobility of assets, more 24-hour, 7 in the case of digital assets, real time, these are all real things that the financial system today doesn't deliver as well as it could. So the combination of AI which is very exciting for these same things but very importantly the mobility and the storage, new opportunities that the technologies of digital assets provide, I think is a very exciting thing.
Yeah and you mentioned you're of course the first and only G-SIB which is systemically important institution that offers digital asset custody and this is noteworthy because you're one of the world's largest custodians with 57.8 trillion in assets under custody or administration. What did you need to do to feel comfortable doing this? Because you're really leaning in in a big way, a first mover here. I can imagine it wasn't something that you just kind of oh let's do this and you know turn on a light switch and it ultimately happened.
You know, there was a point of view, some people still have it and I respect it. It's not our point of view, but that ultimately DeFi was a way to sweep away established players, entrenched points of interest, and everything could start with a complete clean sheet of paper. Obviously, it's self-serving for me to say this, but that wasn't our point of view as an established institution that's been around for a while. But I think we have some very good reasons for thinking that we have a real role to play in this space because we have several different advantages. We are a trusted organization because we have a network effect already. We have an existing set of customers. We're deeply connected to the existing rails. We can act as a very effective bridge between the traditional finance and the digital finance ecosystems because at the end of the day a technology that's in search of adopters can sometimes struggle but we are an adoption vehicle because we can actually encourage our customers to make the leap. Take a money market fund. We've created digital tokens, new share classes for money market funds. So established money market fund providers who offer share classes of money market funds can also offer a digitized money market fund. It's essentially the same fund, different share classes, different ranges and that allows for that to be distributed as a digital asset product that will actually encourage adoption as opposed to just starting from absolutely nothing. So for us being an established player, we make $3 trillion of payments every day. We custody $60 trillion dollars of assets. We have eight trillion dollars of collateral assets on our platform. We settle 20 to 30 trillion dollars of US treasuries every single day. We have $3 trillion of wealth assets on our software and services platform. We're the world's largest corporate trustee. These are big established positions that allow us to partner with digital asset clients to be able to help them drive the innovation but also partner with our existing clients to help them adopt the innovation and the coming together of those worlds. It's very helpful. This network effect, the trust, the incumbency is actually a powerful speed to adoption.
How do you think about risk mitigation with this new technology especially being the first mover and ensuring that nothing unscrupulous is going through the systems?
Yeah, it's incredibly important and we're super vigilant about it. You know, resilience is a commercial attribute for us. Cyber defense, chasing criminals out of the system, making sure they can't get a foothold, that's as true in the new technologies as it's been in the old ones. And I think again another reason why having established trusted market participants in the system actually creates a reputational enhancement for what is the system and the ability of people to trust it. If it's the wild west, then it'll be fun for some folks to live in that wild west world. But at the end of the day, the 90% of the financial services community, the pension funds, the big asset managers, the big users who ultimately are going to help to encourage full adoption, they don't want to have anything to do with it. So, it is actually really important that it's safe, that it's reliable, that it's trusted, that we have kind of the concepts of know your customer, know your token provenance, and all of that stuff embedded actually in it. And that's obviously important for us as a regulated institution, but I actually think it's good for the system as well because when the system gets trusted, it actually can promote this concept of adoption. It's safe to use. BNY is participating here. We can help and rely on them. But yeah, you have to have good standards and sometimes there's a bit of grinding when it comes to that when the old meets the new. But for us that standard setting is an important part of the value proposition.
Obviously, it's essential for us as well. How is the standard setting different for digital assets versus known securities, treasuries, cash and so forth?
Well, I think the concepts are the same, which is at the end of the day, who are you transacting with? What is it? What is the purpose? And there are parts of the digital asset world which are okay to sort of, they are happy to live a little bit more without all of the bright light. But I think for the established system in order to truly, truly have adoption, you've got to have those principles of understanding and not be trying to hide in the shadows. And so we're in the business of saying who are the customers, what is the asset, is it safe, is it doing what it says on the box, is it a product that's actually going to be able to deliver a use case? And is it actually supporting the growth of the economy and financial markets? Like we take a very simple straight line approach which is economic prosperity for a nation is super important. That's the mission statement really for all of us living in a nation to create and enable national prosperity, in this case here in the United States but we do this around the world. We're a very global institution. In order to do that we have a point of view that you have to have a great financial system. In order to have a great financial system you have great capital markets. In order to have great capital markets, you got to have the various different market participant ecosystem that drives that. That's digital asset providers. That's traditional rails. It's asset managers, hedge funds, liquidity providers, large banks, small banks, community banks. And if you have a rich ecosystem, you have innovation. And that's very important. So for us, enabling that is part of the mix. But in order to get everybody in the ecosystem, it has to be a trusted situation.
